Quar te 2012 issrue 1 ly - Home | FMICreative Strategy Can Transform Your Company 20 Through steadfast determination and perseverance, companies can establish ... From creativity to

creative construction

Quarterly2012 issue 1

THIS QUARTER

Creative Construction 4

BY JERRY JACKSON

BUSINESS DEVELOPMENT

Stop Chasing All That Work 6

BY CYNTHIA PAUL

QUARTERLY INTERVIEW

Mapping Customer Satisfaction: Balfour Beatty Construction 10

BY CYNTHIA PAUL

Construction Materials Will Hill

Contractors Rick Reese

Engineers and Architects Lou Marines

Heavy Highway/Utilities Jay Bowman

International Steve Darnell

Private Equity George Reddin

Manufacturers and Distributors John Hughes

Surety Lanny Harer

Business Development Cynthia Paul

Leadership Tom Alafat

Mergers and Acquisitions Stuart Phoenix

Project Delivery Gregg Schoppman

Trade Contractors Randy StutzmanKen Roper

Strategy Brian Moore

Talent Development Ken Wilson

Compensation Grant Thayer

Perspectives Lou Marines

CONTACT US AT:[email protected]

Board of Directors

Hank HarrisPresident and Chief Executive Officer

Stuart PhoenixChairman

Landon FunstenWill HillScott KimplandLee SmitherCharles ThomsenCharles ThorntonScott Winstead

Copyright © 2012 FMI Corporation. All rights reserved. Published since 2003 by FMI Corporation, 5171 Glenwood Ave., Raleigh, North Carolina 27612.

Printed in the United States of America.

Departmental EditorsPublisher andSenior EditorJerry Jackson

Editor andProject ManagerKelley Chisholm

Group ManagerSally Hulick

Graphic DesignerMary Humphrey

Information GraphicsDebby Dunn

FEATURES

Creative Strategy Can Transform Your Company 20Through steadfast determination and perseverance, companies can establish themselves as top contenders among their competitors via their strategic plan.

BY LEE SMITHER

Talent Development Trends for a New Reality 28In order for construction firms to remain viable and successful within a new economy, they must continue to invest in their human capital.

BY ASHLEY SISK

Finding Opportunity in Today’s Acquisitions Market 40Like investing in the stock market, acquisition strategy requires constant analysis.

BY TIMOTHY R. SZNEWAJS AND SCOTT DUNCAN

Innovation: Fostering Creativity in the Construction Industry 48Companies that are excellent in operations tend to implement innovative ideas more effectively.

BY JIM SCHUG AND ALBERT WATSON

Future Strategies: Part 3 — Execute the Plan 60A well-run firm takes a holistic approach to strategic planning and its execution. Ideally, these are not special events, but everyday practices.

BY STEVEN J. ISAACS AND KAREN L. NEWCOMBE

New Game, New Risks 68Contractors must remain vigilant to change, great or small, and not lose sight of the blocking and tackling necessary to manage risk effectively while creatively responding to the environment.

BY RICHARD TISON

Wellness at PCL: A Holistic Approach 76Workplace wellness programs have numerous benefits, including healthier and happier employees who are safer, more productive and loyal to their employers.

BY KELLEY CHISHOLM

Creative Engagement: Build Better Communities 88Each quarter Cynthia speaks with leaders in the A/E/C industry on topics that echo the theme of the issue.

BY CYNTHIA PAUL

Integrating Philanthropy With the Bottom Line 98Research shows a strong link between firms with active corporate social responsibility programs and strong financial results.

BY LOUIS L. MARINES

Art Is Hope: Binding the Past to the Present 106Art, beautifully and miraculously, has the ability to erase boundaries of space and time and replace them with a shared geography of the soul.

BY N. ALEXANDER MILLER III

Dear Reader:

Winter is a good time for reflection and contemplation. Reflection, to siftthrough the past and note lessons learned, and contemplation, to examinehow both recent and long-term learning should affect our future. For some,the results of that contemplation will be to stick to one’s knitting. For others,the contemplation will lead to a realization that some things have changedforever and our business will never be the same again. Facing that latter realization, some will engage in prolonged bouts of “ain’t it awful” while otherswill conclude that only creative action can improve the future. Much of thisissue of FMI Quarterly is aimed toward those who aspire to perform betterthrough performing differently.

In his 1940s book “Capitalism, Socialism and Democracy,” Joseph Schumpetermade currency of the term “creative destruction” and applied it to the disruptive power of radical innovation. He saw creative destruction as thenecessary result of entrepreneurs acting to sustain long-term economicgrowth, even at the expense of those on whose shoulders the entrepreneursstood. If you buy the premise that long-term economic growth is good, thencoupled with that notion comes the requirement for continuous green-fieldingof opportunities. The steam locomotive changed the game from agriculture to industry for many geographies. Air transportation shrunk the world. TheInternet changed how information and goods were bought and distributed.The changes in our lifetime are not obscure, but the more recent profoundimpacts upon the construction industry certainly provide harsh illustrations of creative destruction and underscore a clarion call for creative response tochanging times. Hence, our theme, creativity.

On theme, this issue brings you an array of feature articles and one departmental brief. In Creative Strategy Can Transform Your Company, Lee Smither talks about how organizations need to be creative in the deployment of their strategy. Ashley Sisk examines challenges and innovationsaffecting training and development practices in construction firms nationwidein Talent Development: Trends for a New Reality. In Finding Opportunity inToday’s Acquisitions Market, Timothy Sznewajs and Scott Duncan recommendemploying creative strategy to gain lasting competitive advantage in today’sdown market.

This Quarter:Creative Construction

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This Quarter: Creative Construction

2012 issue 1 FMI QUARTERLY � 5

Jim Schug and his co-author Albert Watson discuss how innovation has a valuable place in contracting organizations in Innovation: Fostering Creativityin the Construction Industry. In his article New Game, New Risks, Rick Tisoninterviews Michael Davis of our publishing partner Zurich for his thoughts onhow firms are creatively managing risk. Kelley Chisholm, FMI Quarterly’s editor, speaks with Diana Canzona-Hindman of PCL Construction about thecreative steps she took in establishing PCL’s wellness program in Wellness atPCL: A Holistic Approach.

In our Conversations with Cynthia feature, Cynthia Paul engages Judy Nitschand Lisa Brothers of Boston-based Nitsch Engineering on how they are innovative in differentiating themselves from other firms in CreativeEngagement: Building Better Communities. Cynthia also offers advice on winning the right work in her departmental piece, Stop Chasing All That Work.And if that was not enough, in this issue’s main interview, the eternally busyand energetic Cynthia speaks with John Parolisi and Manny Katinas ofBalfour Beatty Construction, who are bringing client satisfaction to a newlevel in Mapping Customer Satisfaction.

Steven Isaacs and Karen Newcombe continue their strategy series withFuture Strategies: Part 3 — Execute the Plan. Lou Marines offers IntegratingPhilanthropy With the Bottom Line as part of his quarterly Perspectives feature.

A number of essentially technical institutions have established aggressiveinjections of creativity-enhancing curricula and optional activities. N.C. StateUniversity is one such institution, and Alex Miller, associate chancellor, acceptedmy invitation to contribute to our theme of creativity. Hardly the stuff youtypically read in these covers, I think you will enjoy the creative connectionsthat Alex makes in his short article Art Is Hope.

From creativity to innovation to game-changing results, it takes entrepreneurship, leadership, resources and persistence. Such entrepreneursseek to create their future, not wallow in that allowed to them by others.Assumption of responsibility for one’s future has been one foundation of ourcapitalist economy and likely will continue to be so. That is, so long as our system itself is not wrecked by those who blame capitalism rather than themiscreants themselves for our recent years of economic havoc.

We hope that you find inspiration, reinforcement and not so gentle nudges in these pages. FMI can likely assist you more directly in building your future.If we are not already doing so, give us a call and let’s talk.

Sincerely,

Jerry JacksonFMI Quarterly Publisher and Senior Editor

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Departments

BUSINESS DEVELOPMENT Stop Chasing All That Work

It’s counterintuitive — our teams are so busy chasing work they are missing the very opportunities they should be winning. Worse yet for theindustry, it is wasting millions of unnecessary dollars and countless hours oftime. To win work, you have to stop chasing all of it.

BIG STEPS FORWARDIf you want to win more work, you need to engage the whole company.

Rethink your employees’ roles so they have the time to build relationships,get rid of unnecessary time wasters for your business development people,and teach your senior people how to become rainmakers.

Creating a customer-focused culture is the right thing to do. It helps you take advantage of the benefits to be gained from functional silos, whilestaying focused on the fact that without customers to work for, being able to design and build amazing structures is fruitless. Do not give it lip service;actually create the culture. The customer can tell the difference between lipservice — and all industry firms are saying they focus on customers — versusdelivering the goods on culture.

Teams are shifting to a seller-doer model to help bridge the cultural gap between operations and business development in order to put workacquisition at the forefront. The message needs to get to project managers,field managers, estimators and even internal administrative/support staff.Everyone must focus on meeting the needs of the end customer to stand outfrom the crowd. You must drive it into your culture by changing the customerinterface expectations and compensation of crucial roles.

CLOSE, BUT NOT QUITE THERE Get serious about which customer and project you target. Look at your

last five proposal/RFP opportunities. Did you really give the client a businessreason to pick you besides price? Develop a rating system, such as the oneshown in Exhibit 1. What score would you give each opportunity? Better yet,rate the last 20 or 30 opportunities. Determine the median score. Dig intothe facts to see what the score tells you. If you have an average between

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2.5 and 3.5, you are spending a lot of money and coming up secondtoo many times. Some jobs warrantyour “best effort.” Others demand a unique approach. The key is starting with a candid rating.

Get your team engaged and get a dialogue going. Be ruthlessly honest in your assessment. Betteryet, ask the prospects you lost. Didthey see something that could haveadded enough business value to put your team and approach into a winning position? Could you have soldthat difference better? For the winning projects, the question might become,“What added enough business value to put our team into a winning position?”Ask them on the projects you won too! The response from customers can bequiet humbling. “It is what we expected” or “we trust you ” are not rousingendorsements of your creative talent.

Too often clients receive approaches that are compliant, which only lumpsthose contenders into a big pile of “pretty much the same,” or “discard” or“pick the low-price choice.” If you get anywhere near that pile, you better findmany ways to get your costs down if you want to win the work. Give them astrong business reason to pick you or else you only have two choices: Eithercut your price or do not bid the project. If the only thing that distinguishesyou from the competition is a low price, either by actually having a strategythat allows you to deliver the project cheaper or by inadvertently leavingsomething out of the scope, do not complain after the fact that the only realdifferentiator was price.

If the customer truly is going to buy on price and price alone, great! Makea business decision if it is worth your time to play that game or not. If it is, get in and be competitive. But do it in ways that are not adding unnecessarycost to the chase or committing your best people. If not, thank the customerfor saving you a bunch of time and ton of money and go looking for a betteropportunity. The challenge is not having too few potential projects to chase;it is having enough of the right projects to chase.

Do not blame potential clients for your wasted time and effort chasing a lost project. You were the one who decided to chase it. They truly have noidea of the staggering costs and time commitments invested in the process. It is in their economic best interest, however, to have you chase the workwith the rest of the pack. Take back the control and make better businessdecisions about what opportunities to invest in and which ones to pass on.Decide which opportunities only warrant a “qualified response” and whichneed to be a unique chase and a creative solution. Bottom line, you cannotafford to go all out on all project opportunities. Some opportunities simply donot justify that much of your time and interest; but others do. You must haveobjective ways to tell which opportunity is which.

Ask the customers where you missed on the proposal. They frequentlydo not see anything in the approach that gave them much of an excuse to

Exhibit 1

Rating System

We had a unique approach that delivered quantified client value.

We were compliant and gavethem what they wanted at the best price we could.

We needed to respond but really did not have a compelling strategy to win.

5

3

1

8 � departments

buy except price. You have to give them a business reason to pick you, unless you are the lowest price in the pack. They have to go back and justifytheir selection decision — internally, to their board, funding source, etc. Tobe compelling, the business reason needs to be more than simply that youhave the expertise and people to do the project. Most of the other good contractors do too. You have to give them something of value to them andtheir organization.

Without a compelling reason to do otherwise, customers haveproven a preference for picking a low price from the largest qualified contractors chasing the work. The winning projectapproach (see Exhibit 2) requiresthree simultaneous elements:

• Meet project expectations• Deliver a competitive price* • Give them a unique reason to pick you

* Competitive price, by definition, is one where you will make money on the project but have an approach to the project that either gets you low or very close to it.

If you have two of the three,you will be close, but not selected.That is where, on a private project, four contractors all hear that they weresecond on the job. Being second is somehow an easier message to deliverand hear. But being second is simply being the first loser. It is close to firstplace, but you still lost the project. There is little honor in being second.

If you have all three elements, you give them a business reason to pickyou. Be ready to back up your claims on delivered business value and you win.

It all starts with a clear understanding of the business purpose of theproject and working back from there. You need to be pre-positioned beforethe proposal hits their door. Taking the safe approach on the project gets youquickly tossed into the discard pile. Swing for the fences and create an approachthat grabs their attention, and the value of your approach is noticed.

CLOSE MORE OPPORTUNITIES Winning more opportunities means first identifying the business value

you will be bringing to the project. If you cannot identify or create one, youhave a business decision to make: Either eliminate all the cost you can, or do not pursue the project. Push toward the latter strategy when you can. It simply saves time and money that desperately are needed for the right customers and projects. You cannot always pass on an opportunity; theremay be strategic reasons why it makes sense. Truly, when is the last time you

Exhibit 2

Winning Project Approach Elements

Cus

tom

er’s

Obj

ectiv

es Unique

Reason

CompetitivePrice

ProjectWon

Cus

tom

er’s

Obj

ectiv

es Unique

ReasonNotSelected


passed on an opportunity where the work fit your experience, you had thepeople and needed the work?

Teams that know the true cost to chase and win work tend to chasefewer opportunities, yet win more work.

Steps to winning the right work:

• Get upstream and pre-positioned. Identify those customers and opportunities that you want before they go out for proposal or RFP. Meet the key players and get pre-positioned to win.

• Get serious about your go/no go. Knowing which opportunities to chase is the simplest thing a go/no go does. It needs to be able to quantify how much to invest in the opportunity and be scalable for different project sizes and types.

• Get real on your estimating costs and approach. You want to be competitive and make money on the project. You need to know your real-time estimating costs and structure your estimating team to win work.

• Get a solid set of discovery questions. The more you understand the project from the customer’s perspective, the better chance you have in creating a unique approach that will deliver real business value. Get serious and develop a set of discovery questions that more of your people can use to find out the customer’s perspective and needs.

• Get engaged in win strategy sessions. Engage your team in creating the strategy to win. At a minimum, answer these questions: a. Why should customers pick you over other good competitors?b. What are you offering that no one else can or will?c. What dollar impact will it have on the customer and its organization?

• Get more impact in proposals and presentations. If you cannot communicate your message with pizzazz and confidence, you will have invested time and money for nothing. Deliver the message from the customer’s point of view. Answer the “so what?” behind your message (i.e., the benefits) of what you are doing for the customer. Stop talking like a contractor, engineer or architect and think like the customer.

STOP WASTING PRECIOUS TIME AND MONEY Winning your fair share of work is a bit counterintuitive. You have to

spend more time on the right opportunities and get time and cost out of thewrong ones, or better yet pass on them all together. If you cannot create abusiness reason for the customer to pick you, do not pursue it. Winning work,only to find out 18 months from now you lost money on, is a zany strategythat will painfully kill your company. Long before you ruin the company, youwill have destroyed your best competitive advantage, your team.

Stop wasting precious time and money chasing the wrong opportunities. �

Cynthia Paul is a managing director at FMI Corporation. She may be reached at 303.398.7206 or via email at [email protected].

Quarterly Interview

Just talking about customer satisfaction is

not good enough; you have to demonstrateclient service at every step of the process, by

every one of your people.

Mapping CustomerSatisfactionJohn Parolisi & Manny Katinas

BALFOUR BEATTY CONSTRUCTION

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Just talking about customer satisfaction is not good enough; you have to demonstrate client service at every step of the process, by every one of your people.

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One company that is setting a new standard for client service is BalfourBeatty Construction. It is bringing client satisfaction to a new level, startingwith its company vision.

John Parolisi, senior vice president of Strategic Planning & Marketing forBalfour Beatty, and Manny Katinas, client satisfaction manager, join us to sharehow they are making a difference for their customers, one project at a time.

FMI Quarterly: Tell us about Balfour Beatty Construction’s positioning objective.

Parolisi:Our vision is to differentiate ourselves so significantly that wechange the industry. We developed this vision eight years ago when we cametogether as one company. Up until that point, we had operated as separateregionally based businesses. We developed our foundational Creed todefine what we stood for and how we were going to build the company tosucceed in the future.

The opening sentence of our Creed sets the whole thing up. We call it ourpreamble, and it says, “Ours is a service business in which each project isunique.” The reason that sentence is so important is too often people gethung up on we are “just” a construction company. In reality, however, we area service business. Defining ourselves clearly upfront as a service businesswas part of institutionalizing change around what we believed we could provide to our clients.

The construction industry has a significant opportunity to change clientexpectations on what is a great client experience. Creating great client servicestarts with project delivery. We focus strongly on the client perspective andthose of our other key stakeholders.

At the time we were formulating our client-service approach, we looked atindustry websites and marketing information. We found out that the term“service” was touted by everyone. So the issue quickly became, “What are we


The construction industry is rife with contractorstouting a client-focused approach to building projects.Customers hear it in selection interviews, see it on websites and learn about it in project meetings.

Yet, for many clients, the construction experienceremains challenging and unnecessarily frustrating.

12 � quarterly interview: john parolisi & manny katinas of balfour beatty construction

delivering, on a project-by-project basis to create a superior client experience?”We researched companies that are great at customer service, regardless of the industry, and keyed in on the book “Discovering the Soul of Service”(1999) by Dr. Leonard L.Berry, a professor atTexas A&M University.

Berry researched best-in-class servicecompanies across different industries,including companieslike Chick-fil-A and The Container Store to understand whatcharacteristics weredifferent and what were the same. What he found was surprising. Therewere far more characteristics the same than were different in great serviceorganizations. One key was that it all starts with company values.

Value-based companies are the ones that are able to deliver a superior clientexperience. Our values helped create our Mission Alignment Process® (MAP)to deliver “the best construction experience — every time.” In our industry,every project is unique, so you are never going to be able to define the

entire customer experience with astandard operating procedure. Itcomes down to understandingemployees, what they have insidethemselves regarding client service,and the tools we provide them. Thatis what creates the best constructionexperience, something we call “TheSignature Experience.”

When creating MAP, we knew it had to be experientially based andcustomizable for our clients. It alsohad to be a tool for our front-lineproject staff. It takes a lot of discretionary effort to deliver whatis required for the clients wheneach project is unique. You cannot

simply prescribe one approach that fits everyone. We knew we had to focuson a proactive process instead of concentrating on how we performed “afterthe fact.”

We wanted something to deliver a superior experience customized to eachof our clients; that is why we call it the Mission Alignment Process.® It starts

Exhibit 1

Mission Alignment Process®

Source: Balfour Beatty Construction

Align

Act

Learn MeasureDelivering

The SignatureExperience

Performance Management

Rela

tion

ship

Man

ag

ement Project M

anagement

TM

John Parolisi Manny Katinas


with understanding and actively listening to the client’s mission at the beginning of the project, which includes knowing why the company is buildingthe building. It goes well beyond what is in the contract in terms of scheduleor budget to understand what a client really wants out of the constructionexperience. The process focuses on how the experience should flow andhow the client wants communications to take place.

By listening upfront and understanding the client’s criteria for success, wecreate a plan that allows our project teams to deliver consistently on thosekey needs. This includes periodically touching base to measure how we aredoing compared to client expectations. If there are any gaps, we create anaction plan around those gaps so we deliver a best-in-class experience asdefined by the client itself.

FMI Quarterly:What originally launched Balfour Beatty on the vision ofclient service?

Parolisi:Our industry is so high stakes and every project is custom. The circumstances that surround the client experience will also be different fromproject to project. Given all of this, few industries have a greateropportunity to differentiate theexperience than the commercialconstruction business.

One benefit of developing greatclient experiences in our industry is creating an environment of trust-based relationships and highcommunication, which are conducive to being able to deliver projects on time,on budget and with high-quality results. It simply creates the best projectoutcomes, and that is a dual benefit for our clients and company.

FMI Quarterly:What did Balfour Beatty see in the market eight years ago thatmade you think that this was part of the future for the organization?

Parolisi: We saw a number of different levels of focus on the client experience.Many people were talking about it, but there were not a lot of mechanisms inplace or thoughtfulness around how to deliver superior service or superiorexperiences. So we added a bit more science around it in terms of definingit, listening to clients and our other stakeholders.

The other thing we created was a Brand Promise. Specifically, this tool provides our teams with a picture of what a superior client experience lookslike in practice and how that picture looks slightly different depending onthe audience we are serving. For example, a subcontractor’s needs are quite different from our client’s needs of us, but we must understand eachviewpoint clearly in order to be able to succeed.

“I credit MAP and its focus on client satisfaction as one of the most importantfactors in the success of our MilitaryHousing business.”

—Jim Taylor, President, Balfour Beatty Construction

Military Housing


FMI Quarterly: Can you give me an example of what a customer mightspecifically experience with MAP on a project?

Parolisi:MAP starts with a kickoff session, where we spend time reallyunderstanding the client’s mission — first and foremost, what its key needsand success criteria are. This puts the contract somewhat to the side, but wegain an understanding of what the key needs are over the course of the project.

The client decides what is going to define the best experience for itself. Itcould be something as simple as the way it wants its weekly communicationsto take place. And it may change over the course of the project, which isfine. We spend a lot of time listening and then putting together a plan towork jointly with the client to ensure we are delivering. I think upfront theclient sees us as someone who first starts with an incredible desire to listenand to shape our process based on what his or her needs are.

FMI Quarterly: How do you communicate your client focus to a prospectivecustomer?

Parolisi: That is the most interesting piece to deliver. Anyone can say that heor she delivers a great client experience, but it is hard to be able to talkabout it unless the customer has already experienced it. When we started

off, we would say, “Here’s theprocess that we use.” But still, it’sjust a process. Now that we havedone this for six years, we havedeveloped a database of all theprojects and all we did to deliver on the client’s experience. Now wecan describe the process better inour proposals.

If there is a health care project, wecan describe what has been doneover the last 20 health care projects.In general, we can articulate keyneeds and what has been put inplace in order to address thoseunique needs. So we’ve actuallyinstitutionalized our learning abouthow to deliver superior experiencesfor specific types of projects.Clients would actually see that in

the proposal process. Not just here’s our process, but also here’s what we’velearned over the last six years, on more than 300 projects. And for repeatclients, not only will they have experienced and understood what we deliver,but also we can share what we have learned over the course of doing one,two or three of their projects.

Anyone can say that heor she delivers a greatclient experience, but it is hard to be able totalk about it unless thecustomer has alreadyexperienced it.

— JOHN PAROLISI


FMI Quarterly:Manny, as client satisfaction manager at Balfour Beatty, whatare your thoughts on communicating your client focus to customers?

Katinas: In health care, for example, we may have a history of 20 similar projects. In our proposal, we could go in, being very frank and open upfrontand say, “In these 20 similar projects, these approaches worked very well.However, these few things didn’t go so well, and here’s how we addressedthem, the corrective actions that we made and the things that we’ve learnedfrom those issues and how we’re going to apply it to you, prospective client,going forward.”

FMI Quarterly: So do you have a body of knowledge by market sector onwhat the client experience needs to be?

Katinas: Absolutely. We’ve broken it down into our vertical segments acrossthe country and across our divisions, so we have information, for example, on health care, hospitality, higher education, K-12, criminal justice, etc. I assistour proposal teams by finding the key issues that have come up on thoseprojects in recent years and then help address those issues as we move forward with our project acquisition strategy. If we then are awarded the job,our kickoff MAP meeting is very proactive and we’re able to say to the client,“These are the things in this vertical market we’ve seen over the past fewyears, and here is how we’ve successfully addressed those issues to bringyou greater benefit, from day one.” For example, if you are building a greenfield hospital on a nice, clean, flat site, there is really not much youhave to worry about when it comes to noise. However, when you’re doing amajor renovation of an existing hospital, you have to worry about things likepower outages, planned service outages, traffic flow, noise requirements, different hours of operations, etc. So we come into a meeting and show the owner we know these things upfront and have a proactive strategy tomitigate any impact. This gives the client a much greater level of comfortthat our experience brings him or her tangible benefit.

The same concept holds true for the hospitality sector. When we renovate ahotel, we know the business depends on customers who are trying to get a good night’s rest on the other side of our construction activity. So we arevery sensitive about running operations that may in any way impact guestservices or comfort.

I think it is also evident when our repeat customers say, “I hope we’re doing MAP on this project too.” I believe that is because they see MAP as a direct contributor to building a higher degree of open communication. Thatopen communication translates to a culture of openness across our entireorganization, which I think is one of the true benefits of the MAP process.

People have told us that MAP reflects a high-level commitment to servicethroughout the organization. I believe this is true because our projects arenot billed for this service, nor does the client pay extra for it. It is a corporate


commitment and an investment in how we choose to run our company. It isthat important to us.

Parolisi: MAP is a tool for the project teams. This is a core part of our culture,and it is something that has helped them learn, over the course of several yearsnow, what it takes in order to be able to craft customized experiences for ourclients and deliver on them. They really see Manny as an ally helping them do

that. Manny conducts project surveysto make sure we are delivering onthe plan for the project. It is a toolfor the project team, and that’s whatmakes this really powerful. It is notsomething that is a compliance exercise. We’ve made an investmentto make sure we are supporting thefront lines in delivering a signatureclient experience.

FMI Quarterly: How are you measuring the success of MAP?

Katinas:We have a scoring scalethat we use. We tried to get away from the 10-point, car-dealer satisfaction scale where the salesperson says, “If I don’t get a 10, I get fired after I sell you your

car.” We wanted the scale to be very specific to our projects and to theindustry, to make it unique. We use a five-point scale where we assigned veryspecific verbiage to each number. We are shooting for 5s, which we define as leading the industry. The outcome we want is, if you’ve gone through theproject with us, you’ve gone through the experience and we have done sowell, Mr. Client, that you can rate us the best possible experience you’ve everhad. We want to be known as leading the industry, and that’s what it takes for us to earn a top score of 5.

We take our scores all the way down the line and evaluate them across projects, leadership, divisions and verticals and even into a composite company score. So we do have quantitative data where we can compare andunderstand the impact of the program and how we’re performing. But theinteresting thing is on every single question, on every single survey, we alsoallow for free-form comments.

I do probably 90% of the surveys by telephone or live interviews. So insteadof using a point-and-click type of tool, we really make it a low-tech and high-touch experience. I interview the customers, understand the thinkingbehind their scores, and put that into comment form for the team to reviewand understand what the client is really saying beyond the numbers. So if

We’ve made an investment to make sure we are supportingthe front lines in delivering a signatureclient experience.

— JOHN PAROLISI


someone does give us a 4 — a less-than-perfect score — we understandwhat’s behind it and I can tell the team. Sometimes the client might say, “Inever give a 5 — that would be like you’re walking on water.” Our people tellme that before they look at the numbers, they look at the comments.

FMI Quarterly: Do you tailor the MAP questions based on the projects?

Katinas: Absolutely. The hallmark of the program is that we start from scratchwith a clean sheet on every project. We do have a few benchmark questions,three or four per survey, and we always ask an overall satisfaction question;but beyond that, it is a clean sheet of paper. I go into a meeting with the clientand project team to understand what the issues are. Again, it is very low-techand very high-touch. We have stayed away from third-party providers doingcanned surveys for the construction industry and take a very personalizedapproach to it.

Parolisi: We try to make it easier by presenting key issues that clients haveidentified in the past for the particular type of project. We really would notunderstand and align with the client’smission if we just said all the questions are going to be things we predetermined and they are generic from project to project. The surveys are generally short, about 10 questions. We don’t want to take upany more of the client’s time than weneed to. We also allow the questionsto vary. That is another thing we talk about in the kickoff and overthe course of the project. We work with the client to understand whento survey the project, from phase tophase, and how to sum up the keyissues. These are the questions bywhich we judge ourselves.

FMI Quarterly:What do you dointernally to drive the MAP processinto the corporate culture?

Parolisi: It is our service focus, andMAP is one of the tools that we utilize. One thing that we have doneto drive it in the culture is being committed to it on every project and providing a full-time resource to support each one of our project teams. It is such a core part of our DNA now that when our leaders walk on a jobsite,one of the first things that they will ask is where things are on MAP. Many of our project sites even have MAP boards, where you will see key issues

I interview the customers, understandthe thinking behind their scores and put thatinto comment form forthe team to review and understand whatthe client is really sayingbeyond the numbers.

— MANNY KATINAS


identified so it is very visible and discussed all the time. We are very open asa business about how we’re doing in terms of MAP.

Additionally, several years ago we created a training course called “DeliveringService Excellence,” or DSE for short. DSE focuses on how to think aboutservice, active listening and crafting experiences for particular clients withunique needs. DSE is a tool our divisions use to train their project staff, particularly those getting close to running projects. It provides a broader context for MAP.

FMI Quarterly: Do you use the MAP process internally in your organization?

Katinas: Our Information Technology (IT) department runs a Help Desk thatsupports almost 2,400 employees across the country. The IT departmentcame to me a while back and asked if it might adapt MAP to measure its ownperformance with internal customers. By utilizing the MAP framework, thedepartment now has a useful metric, which demonstrates how it is performingwith its client service focus.

In addition, our sister company, Balfour Beatty in the UK, has also startedusing this process. I was fortunate enough this past summer to go and do arefresher training course with our groups in Edinburgh, Scotland, andManchester, England. So MAP is crossing the Atlantic to become part of ourUK culture. We are very excited about that.

FMI Quarterly:What is the next step for the MAP?

Parolisi: First, we just continue delivering it consistently. We have tweaked itover time as we have learned more, but the key is the ongoing commitment.It is not a flavor of the month that we have focused on for a year or two; it iswho we are. Second, we are looking into modified versions of the processdepending on project type and duration. When we developed MAP, most ofour projects were a year and a half or two years in duration. We have sinceacquired new businesses and organically built others that have shorter duration projects. We have been looking at adapting the process, lookingmore at the relationship level as opposed to an individual project leveland/or some short-form versions of MAP.

We also have been looking at how to evolve MAP for more integrated projectdelivery situations, where we are partnering even more closely with the architectand the other players on the project. We are looking at creating differentvariations of MAP to be even more flexible to those different project types.

Katinas: Acquisitions and new companies that we have brought on boardhave picked up on MAP as a great advantage to have in their tool kit. When I visit a new office, it’s nice to hear, “Wow, this is something that can really makea difference from a service perspective as we go out into the marketplace.”I’m really encouraged by that.


CONCLUSION “Customer experience” is a real-life differentiation platform for contractors.Too often, it is used as a buzz phrase to sell a project with little of the construction process changing as a result. Just talking about customer satisfaction is not good enough; you have to demonstrate client service atevery step of the process, by every one of your people. Client service has tobe much more than a marketing slogan to make an impact. Balfour Beatty is changing the landscape of client satisfaction in the construction industry. And its clients are taking note.

Clients have unprecedented levels of choices of good contractors toselect. Use these three steps to getyou selected for the project ratherthan quickly tossed on the “no” pile:

Step One: Engage your clients. Askthem what you need to do to stand out and be different. Clients are the bestsource of information on how you are performing now and how to set yourcompany apart on client service.

Step Two: Define your vision:

• What is your philosophy of client service?• How do you create a culture that consistently delivers client satisfaction?• What knowledge, skills and abilities do your people need to be able to deliver the promise?

• How should you be measuring the progress made in satisfying clients?

Step Three: Delight your people. Happy employees = happy clients. Givethem the tools, training and resources they need to do a great job. Createprocesses to ensure that client service is delivered consistently. Reward andrecognize them for their efforts.

Applying these three steps together will build a framework of client servicethat will have your clients coming back project after project. Equally important,you will be creating and retaining your top talent, which will pay dividends foryears to come. �

Cynthia Paul is a directing manager at FMI Corporation. She may be reached at 303.398.7206 or via email at [email protected].

Client service has to be much more than a marketing slogan tomake an impact.

I n today’s difficult construction industry, action matters.

Strategic plans alone are not action. Putting a comprehensive

corporate strategy into place can be both a rewarding and

thought-provoking process. By its very nature, the new strategy

challenges the organization to change and focus energy and efforts

in different areas with longer-term payoffs.

Therein lies one of the early obstacles of plan implementation: Rewards areseldom instantaneous. For action-oriented people, distant payoffs are less satisfyingthan quick hits. The result of a successful implementation is the accomplishmentof the strategic goals that will propel the company forward and achieve its vision ofthe future.

However, in many organizations, somewhere between developing a comprehensive strategic plan with specific actions and achieving the well-defined,carefully crafted goals, the balloon loses lift, and some firms return to terra firmawithout accomplishing the milestones or affecting any significant change. Thiscan produce dissatisfaction with the strategic planning process and lead to cynicalthinking that the plan itself was ineffective at best or, worse, a waste of time.Organizations need to be as creative in the deployment of their strategy as theyare in the creation and articulation of it. After all, it takes much more energy andeffort to deploy strategy than it does to create it.

By Lee Smither

Creative Strategy CanTransform Your Company

Through steadfast determinationand perseverance, companies can establish themselves as top contenders among their competitors via their strategic plan.

22 � creative strategy can transform your company

Since real strategy is about winning, not just surviving, all companies need to consider how the deployment of that strategy will be so effective that theyincrease their competencies and performance to the degree that they beat the competition. Here is a look at some major themes that have been used in the creativeimplementation of strategy within our industry.

TRAIN AND DEVELOP YOUR PEOPLE In the mid-s, Skanska needed a mechanism that would combine all of

the best practices that existed from the various companies it had acquired in orderto make itself more competitive through improved efficiency. The overall strategywas one of standardization and centered on developing the “Skanska Way” of execution as a means of lowering costs and improving quality. Through a companywide training program, the strategy was consistently reinforced to allemployees at all levels. Every position was instructed in the specific areas thataffected its particular responsibilities. This effort was an indoctrination of philosophy,processes and tools, all designed to create a unified approach to managing projectsand customer relationships. Not only did it serve to advance Skanska’s operatingperformance, but also it created a cultural glue for all employees, old and new,that bound them together in the path forward.

In order to prepare the way for change, education and communication shouldbe upfront and continuous. Once is never enough. As a company shifts its strategic

direction, employees confrontingchange need education not only onthe change itself, but also on the verynature of organizational change. Theyneed to know what to expect. Theyshould anticipate emotional responsesin themselves and others. They needcoping tools. And they need these lessons more than once. Employees aremore likely to buy in and understandthe shift in strategy if they have earlyparticipation and involvement. For the planning team to go up on the mountain, “discover” the new direction,then come down and inflict it on themasses, is not an appropriate process.

IMPLEMENT BEST PRACTICES Best practices are very similar to the

“Skanska Way” but have their roots inQuality Circles, Centers of Excellence

and even in FMI’s own productivity improvement work. Many FMI Peer Groupmembers have embarked on the path to implement learned best practices withintheir organizations. Whether those best practices are from within or from someoneelse, the idea is simple: Eliminate wasteful practices and inconsistency by repeatingthose processes that bring about the optimal results. “Do the right things all the time.”

As a company shifts its strategic direction,employees confrontingchange need educationnot only on the changeitself, but also on the very nature of organizational change.


Hayward Baker, a geotechnical engineering and construction company, gathered its best internal practices for project management and documented theminto a codified set of standard operating procedures. It took almost six months ofanalysis and documentation. These were disseminated through a series of trainingprograms, performance reviews and branch office evaluations that kept the focuson implementing the Hayward Baker way of setting up and managing projects. As a result, the number of jobs with write-downs decreased substantially and performance, along with profits, improved. Note that Hayward Baker used training and performance reviews to ensure compliance, not simply expectingchange to result from new documentation.

The best organizations will be the ones that are never satisfied with their currentoperations and are constantly pushing themselves to dig deeper, to think in newways and to relentlessly pursue improvement. Albert Einstein once was asked whatcharacteristics separated his mind from the average person. He responded thatwhen the average person is asked to find a needle in a haystack, he or she stops once a needle is found.When Einstein searches a haystack and finds a needle, he continues totear it apart looking for more needles.When we find an answer or solution,most of us stop searching. However,simply because we have one possibleanswer (a current best practice) doesnot mean that we have found the onlyanswer or solution, or even the bestone. Being inquisitive after arriving atone possible solution will most likelylead to even better results. This is theessence of an innovation strategy thatis implemented on the platform ofcompanywide best practices.

KEEP SCORE By building both a performance-

review system and information systemaround key metrics, Zurich was able to focus the entire organization on process standardization and key performancemeasures. In Zurich’s chairman, Jim Schiro, wanted to create a common language, methodologies, metrics, toolboxes and core processes for the company.Zurich grew up out of both organic and acquisition growth. Many of the businessunits had a different vernacular and different ways of doing the same type of business. It was very difficult across the organization to measure or work onimprovement processes in a common way or, better yet, to take some of the lessonslearned and consistently apply them across different parts of the organization.

They used a process similar to a Rapid Results Initiative (RRI), which is anorganized method of stating the issue, how to study it, the anticipated outcomes

The best organizationswill be the ones that are never satisfied withtheir current operationsand are constantly pushing themselves to digdeeper, to think in newways and to relentlesslypursue improvement.


and, of course, how to measure the results(See Exhibit .)

An executive-levelmanager assigns the RRIto a team leader. Membersof the team who are necessary to achieve goodproject discussions havethe support of engagedsenior leaders for participation in the project. This createsrecognition and incentivefor participation. Througha series of meetings, the team creates a results funnel (See Exhibit .). This keepsthe team on course so that everyone knows the plan. The group goal is to achieveresults in days or less. The challenge statement in the RRI calls for certainexpected outcomes. The implementation of the project at days calls for a period of monitoring to test for possible adjustments. The outcomes are thenembedded into the business unit’s strategic plan or performance measurements.

It is important that thegoals are measurable.They take shape in termsof the expected outcomeand might includeincreases in customerretention, product densityor process efficiency.

One example is how Zurich handled professional liabilityclaims for contractors.The evaluation stage ofthe initial report of claimwas taking too long andits customers wantedfaster analysis. The investigation phase wasstraining the contractorand its customer’s (theowner) relationship.Zurich assembled a teamof claims, underwritingand risk-engineeringexperts to respond to thechallenge. What they

Exhibit 1

What Is the Rapid Results Approach?

Source: ©Zurich — RRI Overview/February 22, 2007Source: ©Zurich — RRI Overview/February 22, 2007

• Making change happen;

execution• Commitment and

accountability• Learning and

discovery

• Making change happen;

execution• Commitment and

accountability• Learning and

discovery

• Primacy of results• Creating urgency• Focus

• Primacy of results• Creating urgency• Focus

• Connecting short-term projects

with long-term goals• Managing performance

• Connecting short-term projects

with long-term goals• Managing performance

• Stretch goals challenging; but achievable

• Team ownership of goals• Clarity of purpose; focus

on results

• Stretch goals challenging; but achievable

• Team ownership of goals• Clarity of purpose; focus

on results

ChallengeEmpowermentAccountability

Way of

Thinking

Objective

Set of

Principles

Methodology

Exhibit 2

Rapid Results Funnel: Construction Professional Liability Services RRI

Improve customer experience and support profitable growth through distinctive claims handling

service to gain a competitive advantage

Improve customer experience and support profitable growth through distinctive claims handling

service to gain a competitive advantage

Source: ©Zurich — RRI Overview/February 22, 2007Source: ©Zurich — RRI Overview/February 22, 2007

Rapid Results GoalRapid Results Goal

Create a triage process that involves RE on 30 claims within 90 days, produce impact statements on eight and positive customer feedback on 80% of the claims where customers were contacted.

Reduce ALAE by 40% within 90 days on claims where RE is involved.

Improve customer experience by reducing pending and BP requirements... improving technology, within 90 days with 75% of CPs reporting improvements.

Create a triage process that involves RE on 30 claims within 90 days, produce impact statements on eight and positive customer feedback on 80% of the claims where customers were contacted.

Reduce ALAE by 40% within 90 days on claims where RE is involved.

Improve customer experience by reducing pending and BP requirements... improving technology, within 90 days with 75% of CPs reporting improvements.

In order to: Focus on professional liability. Create a collaborative and communicative process.

Speed the investigation process and improve the opportunity to mitigate loss costs.

In order to: Focus on professional liability. Create a collaborative and communicative process.

Speed the investigation process and improve the opportunity to mitigate loss costs.

Business OpportunityBusiness Opportunity


found was that most of the time, delay in the analysis involved expert evaluationof the design error; yet in many cases, the “fix” was obvious to those experienced inconstruction management. The outcome was to develop a procedure whereby riskengineers would work with the customers to determine if a “fix” could be affectedto the design issue and the case resolved quickly. Working closely with claims, therisk engineers now “triage” claims with their customers. As a result, their customersatisfaction rating on the handling of claims reached an all-time high of %.

As Scott Rasor of Zurich Construction stated, “One of the key ingredients to deploying a new strategic initiative, beyond assigning the strategy work team,the executive sponsor and the team leader, is to work out the metrics and themeasurements prior to entering into the project. This includes providing guidanceand direction around getting the project to a point where there was a measuredoutcome. Often people enter into a project or core process improvement with theaim of making something better — more efficient, delivering at a lower cost —but they don’t think about how they are going to measure that before they beginthe process of what methodologies and what work streams are going to be put around it. Determining whatyou are going to measure, whether it is the economic value, the actual bottom-line value or a growth in sales, helps the team get to a focuspoint around what is necessary toachieve the outcome. The executivesponsor envisions what needs tochange, and the work group goes to the executive sponsor to articulatewhat the metrics or measurements ofthe work team are going to be.”1

Key measurements concentrateefforts on achievement of the rightresults, so when developing “score-boards,” understand the core of whatyou are trying to achieve and determine what measurements will let you know whenyour plan is working. Clarity and focus of key measurements enable visualizationof the result or deliverable that comes from successful implementation.

HIRE THE RIGHT PEOPLE When Beers Construction Company, now a part of Skanska, focused on

entrepreneurial types in hiring project managers and promoting division heads, it was reinforcing its strategy of building an entrepreneurial organization. Thatstrategy depended upon acquiring people who felt as if they were owners, had aknack for finding opportunities, and were also comfortable with a certain amountof risk. While seeking certain personality or behavioral types might seem to be astretch insofar as strategy deployment is concerned, nothing is more importantthan having the “right people on the bus.” “Right,” of course, is dependent uponwhat strategy you are trying to reinforce.

Clarity and focus of keymeasurements enablevisualization of the resultor deliverable thatcomes from successfulimplementation.


A great plan or business strategy alone does not ensure success. It must be executed well for the profits to flow, and successful execution lies in the hands ofthe firm’s people. Taking your business strategy into consideration, determinewhat it is that you need from your people to make it happen. For instance, for alow-cost provider, having employees who are cost-conscious, somewhat risk-averseand resourceful and do more with less goes a long way toward helping the firm

ensure that profit margins are noteroded. In contrast, a firm that isknown for its innovative practices willneed to invest funds in new ideas and training in new techniques to maintainits competitive edge. A firm’s peopleneed to understand its strategy andengage in behaviors that support thisstrategy. Investing in the human sideof the business should be gearedtoward promoting employee behaviorsthat support the business strategy, asthis provides the greatest long-termpayoffs. Ask yourself, “How can ourpeople help the firm leverage its placein the market?” In addition, “What

investments can the firm make to provide our people with the tools and incentivesrequired for them to enhance the success of the firm?”

One large general contractor developed a strategy to outsell its competition by hiring more business development resources and creating a more sales-orientedculture. It invested in three times the number of salespeople it had on the payrolland eventually proceeded to dominate its primary market. It hired these employeesfrom architects, developers and competitors. Its expectation that “everyone is asalesperson” reinforced the significant role of sales in the organization and its vitalplace in ensuring future success. Business development became a place where any aspiring executive had to spend time and succeed before moving up. This company recognized that more and better people working to secure projects weredistinct competitive advantages.

PAY FOR PERFORMANCE What gets rewarded gets done. Tying together performance and reward is a

powerful mechanism for ensuring that strategy implementation is supported.Many clients have created incentive plans that pay for the accomplishment ofstrategic goals. However, if those goals are only financial (i.e., profitability), it couldbackfire. One of the biggest failures of incentive compensation programs is thatthey often do not take into account all the key drivers that will make the companysuccessful. The best incentive plans promote behaviors that are consistent with thecompany’s strategic plan, marketing efforts, financial goals, productivity processesand personnel development. For example, if the company performs negotiated,high-margin, value-added work, the bonus should factor in the level of customersatisfaction. Or, if the company’s strategic goal is to be involved in the local


community, a portion of the bonus should be tied to an employee’s individualinvolvement in boards, associations and other community events. Without purposeful linkage to the company’s strategy, incentive plans risk promotingbehaviors that are contradictory to the stated strategy.

The following questions will help evaluate your current compensation plan:

• Have we defined our corporate strategy and communicated it to the rest of our organization so that employees understand what we want to accomplish?

• Does our incentive plan drive behaviors that lead to the objectives outlined in our strategic plan?

• Do we have well-defined and communicated “best practices”?

To create a pay-for-performance environment, you first must develop andcommunicate a formal strategic plan that creates a unified direction for the company and provides a platform for performance expectations, decision-makingand people development. Without a formal strategy, it is impossible to design anincentive plan that promotes behaviors consistent with overall corporate goals and strategies.

The second step is to develop and implement standard best practices withinthe business. The development of best practices establishes expectations for all positions within the company and enables management to hold employeesaccountable for their performance. These best practices vary depending on the typeof work, size of company and structure of the organization. The key is to identifythe essential processes that affect business, then standardize and communicate them.

Finally, employees must be held accountable for complying with and usingthe company’s best practices. For example, one company might determine thatformal pre-job planning meetings, change-order procedures, customer service and project-closeout processes are its most important best practices. Establishingstandard criteria for how to perform each of these processes creates a platform foraccountability. Once this is established, employees can be evaluated based onobjective criteria, and an incentive program can be developed that compensatesindividuals for consistently doing the right things.

By following these major themes when implementing a strategic plan, companiescan look forward not only to providing outstanding performance, but also toachieving their long-term goals for the future. Through steadfast determination andperseverance, companies can establish themselves as top contenders among theircompetitors via their strategic plan. �

Lee Smither is a managing director at FMI Corporation. He may be reached at 919.785. 9243 or via email at [email protected].

1 Chisholm, K. (). The Zurich Way: An Interview With Scott Rasor. FMI Quarterly ( #), p. .

T he Great Recession has significantly affected today’s

business environment. Organizations trimmed budgets,

reduced overhead spending and “rightsized” to a much

leaner and meaner version of themselves. Companies also put talent

development on hold while they tried to survive.

As the economy turns around, emerging trends show that businesses willhave to reprioritize their human capital needs, a multigenerational workforce is the norm, and aligning your talent development strategy to your business goalswill be crucial to survival. These new realities make it even more important toemploy solid talent development strategies moving forward.

For more than years, FMI has distributed surveys to construction firmsnationwide in order to identify current training and development practices, challenges and trends that are influencing the construction industry. FMI’s “ U.S. Construction Industry Talent Development Report” examines thechallenges, concerns and innovations affecting the construction industry in thepast year and includes articles on emotional intelligence, development of highpotentials, ethical compliance and best practices in the industry.

SURVEY RESPONDENTSWe sent surveys nationwide to more than , construction firms of all sizes

and specialties. General contractors made up % of the respondents, followed

By Ashley Sisk

In order for construction firmsto remain viable and successfulwithin a new economy, theymust continue to invest in theirhuman capital.

Talent DevelopmentTrends for a New Reality

30 � talent development trends for a new reality

by construction managers (%) and engineering (%), as shown in Exhibit . Forty-four percent of the responses were from firms with revenues between million and . million, which is very consistent from our past surveys(see Exhibit ). Also consistent with previous surveys was the number of employeesat season peak, with almost half of the respondents employing – workers(see Exhibit ).

Contrary to previous years, more than half of the respondents (%) werepresidents, chief executive officers or vice presidents (see Exhibit ). Previous years’respondents included mostly training and human resource directors. These figuresindicate that since our last survey in , the economy has certainly shifted, andthe C-suite has become even more proactive with its approach to the developmentof its employees.

TRAINING BUDGETS AND EXPENDITURESWe asked how many people prepared a yearly budget for training activities,

and % indicated that they did. This number has decreased slightly from our

33%

Exhibit 4

Total by Title

100% = All respondents

President/Chief Executive OfficerVice PresidentHuman Resource DirectorOwner — 1%General Manager — 2%Chief Operating Officer — 3%Training Director — 4%Other

35%

12%

10%

49%

Exhibit 3

Number of Employees


8%28%

<100100 to 499500 to 9991,000 to 1,9992,000 or more

11%

5%

21%

Exhibit 2

Annual Construction Revenues


15%15%

<$25 Million$25 Million to $49.9 Million$50 Million to $99.9 Million$100 Million to $499.9 Million$500 Million or more

44%

5%

71%

Exhibit 1

Primary Type of Work


6%

General ContractorConstruction ManagerEngineeringHeavy/Highway/Utility — 3%Architecture — 2%Specialty Trade — 1%Other — 4%

14%


results (%). We also asked what percentage of your company’s payroll wasspent on training, and this averaged .%.

According to the American Society of Training and Development’s (ASTD) State of the Industry Report, the .% figure is slightly more than what otherU.S. companies are spending. In the ASTD Report, training expenditures weredetermined for three groups of respondents — those who responded to their survey(Consolidated), large Fortune companies (Forum), and organizations fromtheir Best Awards program (BEST). As Exhibit illustrates, ASTD projected thatcompanies would spend between .%and .% of their payroll on trainingin , which is slightly less thanwhat we are seeing in the constructionindustry. However, we expect thesegeneral industry numbers to increaseslowly over the next few years as themarket continues to recover.

HOT TRENDS IN TRAININGOver the past several years, we

have looked at some of the latesttrends in training and developmentand have highlighted topics such asblended learning, online coaching, simulations and mini- feedback, just toname a few. This year we offer some insight as to how the industry has changedsince the recession.

One major trend that we are continuing to see impact the industry is use ofsocial media. According to Jobville’s Social Recruiting Survey, % of employersare using sources such as LinkedIn, Facebook, Twitter, YouTube, podcasts, instantmessaging and blogging to recruit new employees. These applications, commonly

One major trend thatwe are continuing to seeimpact the industry isuse of social media.

2002 2003 2004 2005 2006 2007 2008 2009

2.22

Exhibit 5

Training ExpendituresAverage Direct Expenditure as Percentage of Payroll (Without Benefits and Taxes)

ConsolidatedForumBEST

2.472.31

2.05

2.322.20

2.86

2.09

2.72

2.332.20

2.97

2.15

2.70

2.19 2.242.162.33

2.141.91

2.15


referred to as Web ., were not developed for learning purposes; most people use them for social purposes, such as gaming and communication. However, thebasic mechanics behind social media are very similar to those in high-end ContentManagement Systems (CMS).Therefore, we will continue to exploreways to utilize social media in the context of training. We can alreadythink of social media as an extensionof our current communications etiquette. Learning portals will nolonger be sites just for tracking, scheduling and reporting trainingactivities, but also places for collaboration and conversation.

A remarkable % of companieswho responded to this year’s surveyplan to offer Web-based training overthe next year to increase employeeperformance and development. Web-based learning has become increasingly popular over the past few years ascompanies begin to realize the benefits, including reduced travel expenses, less timeaway from the job and just-in-time training.

FINDING AND RETAINING THE BEST TALENTWe asked respondents what recruiting strategies they were using to recruit the

best talent, and % reported that they were using internships and co-ops, exactlyas it was in (see Exhibit ). Internships are usually a win-win-situation forboth the employers and interns, as they allow both parties to see how the job fits.

The National Association of Colleges and Employers’ (NACE) Internship

Exhibit 6

Recruiting TalentWhich of the following is your company using to recruit the best talent?

Internships/co-ops 77

Job postings on your company’s website

Internal employee referral program with incentivesOnline recruiting tools (e.g., Monster.com, Careerbuilder.com)

Professional recruiters

External referrals

Association job boards

Job postings in professional journals

Other

Percentage of total responses

68

63

59

59

44

28

24

9


and Co-op Survey found that employers expect to increase internship hiring byabout % this year and co-op positions by nearly %. The bigger question for usis, how many of those internships and co-ops are materializing into full-timehires? According to NACE, companies are making full-time offers to interns %of the time. After one year on the job, new hires recruited from an employer’s own internship or co-op program are retained at a rate of .%. In comparison,.% of new hires recruited without any internships/co-op experience were stillwith the company after one year. However, when we look at those same hires afterfive years, .% coming from an employer’s program are still at the firm, whileonly % of hires without an internship/co-op experience remained.

The benefits of hiring former interns include increased retention rate of newemployees, reduced training periods and improved personnel selection by usingon-the-job performance as a real measurement of future success.

BEST OF CLASSAs it relates to finding and retaining the best talent, FMI spoke with

Art Corwin, president, CEO and chairman at Moretrench, about his company’sapproach to talent development. Moretrench is a nationally renowned geotechnicalcontractor, officially incorporated in. Headquartered in Rockaway,N.J., and with locations throughoutthe U.S., it has been a respected and trusted name in the civil, environmental, construction and geotechnical engineering communities.Since , Moretrench has been a% employee-owned company.

FMI: You have a robust internshipprogram — how many of your highpotentials (top performers) come outof that?

Art: Probably %. While wehave always had interns, we started aserious internship program about years ago. We’re a firm of or so,and it’s not unusual for us to haveeight to interns. It is costly — if wehave interns at , a week for weeks, it comes to ,. Butout of that, we offer more than half of them jobs. Some of the interns are with us for two or three years, so when we do offer them a position and theyaccept, the interview process is over, questions on whether they will work out are over, and we know we have someone that we’re willing to invest time andmoney in going forward because he or she has already proven his or her potential.Does it always work out? No. We also had interns who, at the end of their

The benefits of hiringformer interns includeincreased retention rateof new employees,reduced training periodsand improved personnelselection by using on-the-job performanceas a real measurementof future success.


internships, decide that this is not what they want to do. Well, we’ve just savedourselves a mis-hire.

The other thing I find with interns is that they are relatively inexpensive andyou get a lot of work out of them. We save certain tasks for interns to do over thesummer that need to be done but nobody on staff really has time to do. You can

assign an intern to do it, and he or shewill be very excited about it. A useful,worthwhile assignment gets done cost effectively.

FMI: In addition to the internships,where else do you recruit?

Art: We have excellent relationships with many of the localuniversities, including the heads of thecivil engineering departments whounderstand what we do as a company.This has developed over time. Theywill send us prospective candidates.There have been years when they havenot sent anyone because they do notfeel they have what fits what we need,and that’s why we have an excellentrelationship. When they say they

are going to send us a candidate and he or she is your person, we go through the interview process, but it’s pretty much a done deal because if they feel thatstrongly, we’re going to hire him or her.

The entire interview may be found in FMI’s Talent Development Reportand is available at: http://www.fminet.com/talentsurvey.html.

DEVELOPING HIGH POTENTIALSAvoiding turnover completely is unlikely, as it is not always easy to increase

salaries or benefits. In most cases, a little turnover is welcomed, especially in thecase of low performers. While losing low performers can enhance the bottom line,losing talented high-potential employees can negatively affect the bottom line.

We asked if your company has a formal process to develop high-potentialemployees. Comments indicate that the process of developing high potentials exists,but results show that only % of companies have a formal process. Furthermore,when asked if this was part of a structured management succession process, %of respondents said no.

The cost of losing talented and high-potential employees should not beunderestimated. Companies should certainly be cognizant of the immediatereplacement expenses, including recruiting, hiring and training replacements.However, the long-term costs of losing high-potential employees are difficult to calculate until they limits the organization’s ability to win work or conduct business. In fact, the true effects of the loss may not be felt for years.


Fortunately, there are several ways for construction firms to develop and retaintheir top talent. A few of these include:

• Identify the employees worth keeping. Organizations tend to have threetypes of employees: team players, technical experts and high potentials.Companies must identify their high potentials and tell them that they arevalued. In all likelihood, they know it, others inside and outside the companyknow it, and they expect to be treated differently.

• Create development plans. Leadership development plans should be createdat all levels of the organization from field leaders to seniors executives, but inparticular for high potentials. These plans should include the competenciesrequired at each level of development and a way to measure success alongthe way.

• Make learning a priority. Organizations that value, promote and rewardleadership development are much more likely to retain employees that areworth keeping.

Whatever you decide to do, talented employees are just too valuable to let themwalk out the door. Best-of-class employers will provide development opportunitiesto retain that talent.

PREPARING FOR A CHANGING WORKFORCEThe makeup of the U.S. workforce continues to change. Several years ago,

our primary concern was the quickly approaching retirement age of baby boomersand the diversification of the workforce with respect to gender and race. The GreatRecession has changed everything.

The oldest baby boomers turn this year, which not too long ago meantretirement for most. That is not necessarily happening right now. They are finding that not only are they taking care of themselves, but also are responsiblefor the welfare of their parents and even their adult children who return homeafter college to look for work. Many baby boomers are finding that they have tocontinue working because they cannotafford to retire on their current (k).However, tenured employees do continue to leave the industry, takingwith them valuable experience, businesscontacts and years of knowledge that are difficult to replace.

Regardless, companies mustrestart any succession planning theymay have put on hold during therecession if they want to ensure thatthey will have an adequate supply oftalented employees in the comingdecades.

We asked how organizations arepreparing for a changing workforce

Many baby boomers are finding that theyhave to continue workingbecause they cannotafford to retire on theircurrent 401(k).


(see Exhibit ), and at least three-quarters of those who responded indicated that they were:

• Promoting internally to key positions (%)• Training to improve performance in specific competencies (%)

SUCCESSION PLANNINGThe leadership transition process is a key component of a firm’s leadership-

development plan as well as its overall strategic plan. Yet, the transition from oneleadership or management position in the firm to a higher level is often difficult.Leaders- or managers-in-transition often find it hard to let go of their fondness forfamiliar duties, perspectives and work habits, hampering their ability to assumenew responsibilities.

This phenomenon will continue to cause a surge of challenges and opportunities, including:

• Transferring ownership to a new generation of leaders• Capturing and embedding the cumulative knowledge of outgoing employees• Developing intentional, purposeful succession plans• Growing high-potential employees’ abilities to lead versus manage and

think strategically versus operationally• Preserving organizational culture for future generations• Shaping business models to meet the demands of a volatile and uncertain

market

Exhibit 7

Preparing For a Changing WorkforceWhich of the following is your company doing to prepare for a changing workforce?

Promote internally to key positions 84

Train to improve performance in specific competencies

Provide internship/co-op programs

Employ “best practices” to retain key talentNetwork with community and industry groupsEstablish core competencies by positionIncrease recruiting efforts at schools, colleges and/or universitiesIdentify current gaps in core competenciesIncrease recruiting for experienced industry talent

“Poach” employees from other firms

Develop project competencies needed in the next 5 to 10 years

Recruit in nontraditional labor pools

Offer phased retirement or contract work for retiring employees

Other


78

72

70

64

61

58

53

50

45

21

21

15

1


For several years, succession planning has been top of mind formany firms within the constructionindustry. Unfortunately, the economic crisis threw retirement and leadership-development plans ofmany construction firms into disarray.Now that the shock is over and recovery strategies are in place, it istime to put leadership transition plansback on track. In fact, based on thesurvey results, it is evident that most

companies realize that failure to move succession plans forward is much too largea gamble. Ninety-two percent of the respondents said that their organization has a well-defined plan for its executive leaders, an increase of %. This was followedby % who were planning for senior managers, % for project managers, %for field managers and % for experienced trade and craft personnel.

Succession planning is an ongoing, systematic process and should be tied tothe organization’s strategic plan. In other words, the details of your succession plan are dependent on what the business wants to be in the future. It includesidentifying, assessing and developing talent to ensure leadership continuity andmust allow for unforeseen and constantly changing business needs. It must reflectthe way a company wants to evolve in the future by aligning with strategic objectives and goals. Carefulsuccession planning now can make all the difference in retaining key talent and ensuring your firm’s ongoing profitability and success.

EMOTIONAL INTELLIGENCEMost people working in

construction have experienced the pressure that results from the convergence of demands on schedule,price and quality. Construction is ahighly competitive industry; leaders at every level are forced to respond to demands that may push them tothe breaking point. Leaders who have difficulty managing emotions or lack sensitivity to the emotion of others inevitably have an adverse effect on the teams they lead. The inappropriate responses can vary widely from person to person, but may include explosive outbursts, unproductive comments and isolation.These types of responses are typical of leaders struggling with developing theiremotional intelligence skills.

Most respondents identified “being an employer of choice” as the key strategy

Careful succession planning now can makeall the difference inretaining key talent andensuring your firm’songoing profitability and success.


to attracting and retaining talent (see Exhibit ). If an organization’semployees are forced to deal with leadersinside the organization who cannoteffectively manage their own emotionsin this demanding environment, thenhow can the organization claim to be anemployer of choice? Marlin Company’s Attitudes in the AmericanWorkplace poll found that “nearly % of U.S. workers are aware of athreat or verbal intimidation. Elevenpercent report being aware of an assault or violent act, which is up from% in .”

It is more important today than ithas ever been for leaders to define clearlywhat behavior is acceptable and what isnot from members of the organization,particularly for the leadership team.The adage that people do not leavecompanies, they leave managers is appropriate today, and top talent will always beable to find a job at another firm if they are dissatisfied with how they are treatedin their current organization. Outlining behavioral boundaries and setting theexample are excellent ways to prevent problems before they arise by identifyingguardrails to keep leadership consistent and positive throughout the organization.

ESTABLISHING AN ETHICS CULTUREThe construction industry has long had an image problem. More companies

are living in the “gray,” pressing beyond their own ethical comfort zone just to

Exhibit 8

Finding and Keeping TalentWhat are the top-three strategies companies focus on to attract and retain talent?

Being an employer of choice 79

Providing comprehensive benefits and rewardsOffering training/learning opportunities

Giving market-competitive compensation

Establishing clearly defined career paths

Maintaining a diverse culture

Building the position/hiring practices

Providing strategic onboarding practices


59

56

55

24

15

11

0

It is more importanttoday than it has everbeen for leaders to defineclearly what behavior is acceptable and what is not from members of the organization, particularly for the leadership team.


stay in business. Apparently, the potential for financial loss or gain is a strongincentive for companies, and the individuals within them may feel pressured totake a detour from the ethical, principled way. The challenge going forward is toestablish clearer standards to elevate the industry’s reputation.

Ethics policies are rarely mentioned when contractors speak of their success,though ethics has become a defining issue for the design and construction industry.Driven in part by societal pressure, ethics programs are gaining prominence withinfirms whose leadership have made it a priority and throughout the industry, supported by associations like the Construction Industry Ethics and ComplianceInitiative (CIECI), the ABC and the AGC.

The establishment of effective ethics policies also provides strong evidencethat the company is striving to be ethical, and that, in turn, raises the bar for theindustry. It also provides a passive defense against undetected incidents of unethicalbehavior and reduces company liability when an ethical breach occurs. Companiesneed to start talking more about their ethical successes and beginning to do moreto prove that they truly care about being ethical.

CONCLUSIONBy now, you have likely gone through a workforce reduction, a compensation

adjustment or both. As companies begin to position themselves for future growthin the face of an uncertain economic recovery, they are also faced with somestrategic decisions. In order for construction firms to remain viable and successfulwithin a new economy, they must continue to invest in their human capital.Organizations that strategically address the need to develop talent through recruiting, hiring and retaining, training development and delivery, performancemanagement, career pathing, succession planning and evaluation will maintain acompetitive advantage. �

Ashley Sisk is a talent development consultant with FMI Corp. She may be reached at 919.785.9242 or via email at [email protected].

A s it enters the end of 2011, the construction industry

faces more than 14 straight quarters of contraction

and decline. With this prolonged downturn, many

firms have learned to deal creatively with and manage through

uncertain environments. In short, a new reality has become clear:

Firms with seasoned leadership, solid balance sheets, strong value

propositions to their customers and a focus upon controlling

operating costs are surviving the volatility and managing to earn

profits in a down market.

Having stabilized their businesses, the question that many of these successfulfirms now face is how to proceed to grow in the future: continue to scramble in a hyper-competitive low-bid market and hope for a recovery? Or employ creative strategic thinking to gain lasting competitive advantage in a market facinga prolonged recovery?

In this article, we contend that acquisitions in today’s construction marketoffer the opportunity to deliver unprecedented value, provided that the acquiringfirms utilize a disciplined strategic process to maximize returns.

By Timothy R. Sznewajs and Scott Duncan

Like investing in the stock market,acquisition strategy requires constant analysis.

Finding Opportunity inToday’s Acquisitions Market

42 � finding opportunity in today’s acquisitions market

THE MARKET FOR ACQUISITIONS Economics demonstrates that the value of goods and services is driven

inherently by supply and demand. Limited supply and high demand yields higherprices; oversupply and limited demand yields lower prices. The acquisitions marketfor construction firms is no different. In today’s construction market, demand for acquisitions is strong, given the large amounts of capital available to global corporations and the need for growth. Luckily, two principal forces are acting toincrease the supply of companies available in the market. The first is overcapacity:While the weakest firms have exited the market during this downturn, many firms continue to limp along by procuring work at lower margins while hopingfor economic recovery. The second principal factor adding to the supply of eligibleacquisition targets is demographics. Many construction firm owners are reaching

retirement age and desire to exit theindustry but have been forced to continue to lead their firms throughtoday’s economic environment.

In a University of Dallas/GW Equity survey of companies with million to million in revenuesindicated that three out of four businessowners intended to sell their businesswithin three years, predominantly due to age concerns. Valuations since have declined significantly due todeclines in earnings, which made manyowners reluctant to sell. However, witha lack of strong fundamental catalystsfor economic growth, many of theseowners are questioning their decisionsto continue in the market, in additionto the fact they are five years older thanwhen they intended to sell originally.

For the strategic acquirer thesetrends present enormous opportunity.Surviving firms in today’s market have rightsized their balance sheets,lowered overhead and refocused on corecompetencies. Furthermore, employees

who have survived the layoffs are talented and seasoned and searching for opportunity.Thus, if a firm can be found that fits an acquirer’s strategic objectives, a purchasecan provide strong returns even prior to any potential synergies. In other words,the value proposition for creative, strategic acquirers is more compelling than ever.

A STRATEGIC FRAMEWORK FOR ACQUISITIONSAs our colleague Lee Smither pointed out in “Rethink Your Market Strategy

and Grow,”1 growing any construction firm is a choice. And while not all growthis good, as explained in “Why Contractor’s Fail,”2 not growing can often be more

Surviving firms intoday’s market haverightsized their balancesheets, lowered overheadand refocused on core competencies.Furthermore, employeeswho have survived thelayoffs are talented and seasoned and searchingfor opportunity.


dangerous than growing. This is not to be understated — by deciding towait for better times, you place yourfirm’s competitive position, humancapital and overall customer valueproposition at risk.

Choosing to grow, especiallythrough acquisition, must beapproached strategically. To do thiseffectively, your firm must identifywhat it wants and why, well ahead oflooking at specific opportunities.Many acquisitions are made simplybecause an opportunity came along,not necessarily because it representedthe best alternative available. Given today’s environment, now is the time toactively pursue opportunities within a strategic framework, rather than sit back andwait for them to come to your doorstep.

To do this, the best acquirers in the construction industry utilize a top-downanalytical process that flows directly from their strategic planning objectives. This type of process typically involves multilevel analyses designed to answer thefollowing questions:

• Macro-level Analysis — What macro-level forces will affect our firm overthe long term?

• Market-level Analysis — What market dynamics will provide the bestopportunity for our firm to find margin and sustainable profitability?

• Micro (or Company-level) Analysis — What company type best fits our culture, operational structure and return requirements?

The purpose of these analyses is to identify major trends and get ahead of them;identify markets that will provide opportunities for sustainable, above averagemargins; and find companies in a strong position to leverage both the marketdynamics and the macro-level trends while fitting within the acquirer’s culture.

THE MACRO-LEVEL ANALYSIS Macroeconomic, social and political forces have a powerful effect on business.

These forces are often intertwined but can dramatically affect certain sectors of theeconomy while leaving others unscathed. The purpose of the macro-level analysisis to first recognize high-level trends and secondly attempt to understand whattheir likely impact will be on the future.

Of the list of trends in Exhibit , how many of them have affected your business? How many of them will affect your business over the next five to years? In all likelihood, your firm has been impacted dramatically by several ofthem, whether the decline in residential markets created new competitors in yourcore markets, new regulation increased employee costs, or social media altered theway you interact with potential customers.


As your firm kicks off its strategic acquisition process, you should develop alist of trends and discuss the following questions:

• Does this trend present an opportunity or a threat to my current business? • Does the trend affect my competitors equally? • What opportunities does this trend present?• Does the trend provide risks to other segments of the economy, which may

then influence ours?

For example, the technological development of horizontal drilling and fracturingof natural gas shale resources has had a major impact on U.S. energy markets andcertain geographies like the Marcellus shale in New York and Pennsylvania and the Haynesville shale in Louisiana. This trend has also created strong demand forinfrastructure in these areas and has boosted pipeline construction nationally. Hasthis brought new competitors to your markets? Does it present an opportunity ora threat? Could cheap natural gas resources alter the construction plans of utilities,

which could then affect your ability to earn work?

Interest rates are another example.With bond rates at record lows, companies are currently earning littleto no interest on cash balances whilealso paying higher prices for key materials, like fuel and metals, as thevalue of the dollar declines. Thissqueezes the margins of companies ofall types. If this dynamic accelerates,does it provide your firm an opportunityor a threat versus your competitors?Are there relationships or strategiesyou have used to combat this dynamicthat may provide an opportunity togain market share?

Exhibit 1

Recent Trends

Housing markets

Decline in the dollar

Increasing oil prices

Interest rates

Housing markets

Decline in the dollar

Increasing oil prices

Interest rates

EconomicEconomic PoliticalPolitical Social/TechnologicalSocial/Technological

Increased regulation

Bailouts

State/Federal fiscal uncertainty

Green jobs

Immigration

Increased regulation

Bailouts

State/Federal fiscal uncertainty

Green jobs

Immigration

Social media

Hardware/Software advances

Union uncertainty

Energy resource discoveries

Health care costs

Demographics

Social media

Hardware/Software advances

Union uncertainty

Energy resource discoveries

Health care costs

Demographics


Once you have answered these questions, you will likely have a better understanding of potential future risks and opportunities. More importantly, youwill likely have an idea of what markets might represent strong opportunities forfurther consideration.

THE MARKET-LEVEL ANALYSIS The macro-level analysis will likely spur thought about the attractiveness of

several markets. However, market-specific factors will play a large role in whetherbusinesses in that market will be successful. When analyzing markets, specificallyconsider the following factors:

• Procurement Environment — Is the market primarily hard-bid, negotiatedor T&M-type work?

• Barriers to Entry — Is there a barrier to new competitors? Typically, barriersin contractor markets are limited, but those that exist are driven by expertise,capabilities and bonding requirements.

• Customer Profiles — How many owners are seeking work? What is theirlevel of sophistication? Do they see “value added” as important, or do theylook for contractors primarily based on price?

• Purchasing Advantages — Do any competitors have purchasing advantagesor self-perform capabilities that provide cost structure advantage?

Each of these factors has a strong impact on the sustainability of margins forthe contractor. For example, in a hard-bid environment with no barriers to entryand little customer concentration, opportunities are abundant for new marketentrants to compete on price. Thus, if you are considering entry to that particularmarket, you must be able and willing to compete effectively on price, likely drivenby either self-performance capabilities,purchasing advantages or anotherform of competitive advantage such as bonding capacity. This may be oneof your firm’s competitive advantagescurrently, in which case further analysis may be warranted. Typically, however, these types of markets arehypercompetitive and not likely toproduce sustainable margins over time.

On the other hand, a market thattypically consists of negotiated work,requires a higher degree of expertiseand serves larger, more sophisticatedcustomers is going to have more sustainable margins, as entering the market requiresboth knowledge and the development of relationships with key customers that likelyare already being served effectively.

The key to this analysis is understanding what significant competitive dynamicsdrive profitability in each market, and whether or not you believe competitiveadvantages can be maintained given the macro forces that are driving your firm’s

The macro-level analysiswill likely spur thoughtabout the attractivenessof several markets.


view of the market. Once you have determined that a sustainable advantage canbe found in a market, company-specific search criteria can be examined in themicro-level analysis.

THE MICRO-LEVEL ANALYSISOnce you have identified markets that are attractive, the next step is not to

identify candidates, but rather identify the characteristics of companies that fitwith your firm on an operational level. This analysis often includes considerationof the following:

• Cultural — If you are a firm working primarily in hard-bid markets, canyou acquire a smaller, high-margin “value-added” company and have it fitin culturally? What cultural factors lead to employee success at your firm?

• Operational — What are the operational characteristics that provide competitive advantage in the marketplace? Self-performance? Specific capa-bilities? Government clearances?

• People — Do you require a leadership pipeline to enter this market, or is it an opportunity for internal candidates?

• Return requirements — What types of returns are required to make aninvestment in another firm worthwhile? How much capital is available?

As anyone who has been close to acquisitions knows, the micro-level driverscan present tremendous complications when it comes to integration. The lean,hard-bid general contractor acquiring the marketing-driven, LEED-certified, negotiated general contractor will undoubtedly have some cultural issues. Thus, a leadership pipeline within the target company is going to be essential and youremployees are unlikely to move between the merged organizations effectively.Evaluate these concerns and develop a list of company-specific criteria that aregoing to be important once individual candidates are identified.

PUTTING IT ALL TOGETHERIn this process, a firm will identify macro-level forces that are both threats

and opportunities, recognize the markets that are most likely to provide sustainablemargins and develop the specific, company-level criteria that the firm needs toacquire to be successful financially, culturally and operationally. A summary outputmight look like something in Exhibit .

The last step in the process is an active, iterative undertaking. Senior managers must constantly be questioning assumptions, analyzing new macroforces and considering whether the conclusions reached remain relevant and accurate. If a Republican president and Senate are elected in , the example“green job trend analysis” above may be dramatically altered. If health care legislation increases funding for those living in retirement communities, it mightincrease the attractiveness of the above example of “aging population analysis.”

Like investing in the stock market, acquisition strategy requires constantanalysis. Having an established framework in place will provide structure to yourfirm’s thought process and improve the likelihood of finding an acquisition thatfacilitates the long-term growth of your company.


CONCLUDING THOUGHTS Today’s economic environment presents unprecedented challenges to the

construction industry. However, great acquisition opportunities are sometimesidentified in the most uncertain conditions. The question for acquirers is how toseparate the winners from the losers, through a strategic framework that providesinsight on the ultimate drivers of business success.

The analytical frameworks outlined in this article provide construction firms with an introduction to some of the basic tools that can be used to consider acquisitions. Proactive pursuit of acquisitions in today’s market offers anopportunity for favorable valuations, buyer-advantaged deal structures and theopportunity to recharge employee morale. Competitive advantage is truly on sale— will you be a buyer? �

Timothy R. Sznewajs is a managing director with FMI Capital Advisors, Inc. He may be reached at303.398.7214 or via email at [email protected]. Scott Duncan is an associate with FMI Capital advisors.He may be reached at 303.398.7250 or via email at [email protected].

1 Smither, L. () Rethink Your Market Strategy and Grow. FMI Quarterly ( #).2 Rice, H. & Heimbach, A. (). Why Contractors Fail. FMI Quarterly ( #).

Exhibit 2

Summary Output of Markets and Drivers

Natural gas discoveries, union uncertainty, declining dollar

Aging population, increasing health care costs

Growing desire for “green jobs” and increasing oil prices

Natural gas discoveries, union uncertainty, declining dollar

Aging population, increasing health care costs

Growing desire for “green jobs” and increasing oil prices

Nonunion infrastructure and commercial building sector in Western New York

Multifamily/retirement communities

Solar, wind and other renewables markets

Nonunion infrastructure and commercial building sector in Western New York

Multifamily/retirement communities

Solar, wind and other renewables markets

Relationships to natural gas companies, self-performance, marketing capabilities

Relationships to major chains like Sunrise and others, low-cost performance

Relationships to major alternative energy players, Southwestern U.S. presence, political connections, regulatory expertise and performance expertise

Relationships to natural gas companies, self-performance, marketing capabilities

Relationships to major chains like Sunrise and others, low-cost performance

Relationships to major alternative energy players, Southwestern U.S. presence, political connections, regulatory expertise and performance expertise

Nonunion, strong leadership pipeline, revenue targets of $20M annually

Nonunion, strong leadership pipeline, national presence, revenue targets of $150M

Union contractor, strong leadership pipeline, revenue targets of $50M

Nonunion, strong leadership pipeline, revenue targets of $20M annually

Nonunion, strong leadership pipeline, national presence, revenue targets of $150M

Union contractor, strong leadership pipeline, revenue targets of $50M

TrendTrend MarketMarket Market DriverMarket Driver Micro DriverMicro Driver

C reating a company that can continuously innovate is

increasingly difficult in this demanding market. Our

culture does not readily accept “Star Trek” vision

discussions of flying unmanned aerial dozers, moving from project to

project with remote controls. Few in our industry have appreciation

for that “Idea-Prolific project manager” that interferes with the

project constantly by introducing shiny new ideas that cause rework

and much frustration. In fact, most contractors are struggling to

execute the small-scale work that they have on their agendas with the

little resources they have remaining that are stretched thin.

Despite the deep-rooted challenges mentioned above, some contractors havecreated a culture of innovation and are reaping the benefits during an otherwisebrutal market. In these firms, no longer do you hear, “But that’s how we’ve alwaysdone it” justifications for a business-as-usual environment. No longer is there anoverwhelming sense that if you are not incurring labor costs on a project, you

By Jim Schug and Albert Watson

Innovation: FosteringCreativity in theConstruction Industry

Companies that are excellent inoperations tend to implementinnovative ideas more effectively.

50 � innovation: fostering creativity in the construction industry

truly are not working. The companies that have been able to implement creativeand innovative cultures and procedures are the same companies that have beenable to succeed during these difficult periods. Creativity and innovation allow

companies to be flexible as they adjust to their environments and thechallenges that they face.

A national civil contractor suggested, “There are no changes orimprovements in this industry. The companies are using the same equipment and techniques as theyalways have since the plow and steamer.”In fact, quite the opposite is true — in the same sector of our industry,huge productivity advancements intelematics and auto-grade features have revolutionized pushing dirt to analmost manufacturing-like precision.

While none of it is perfect technology, many contractors are enjoying huge productivity gains because of early and effective adoption of these powerful tools.Improvising tools and procedures as well as understanding their value is essentialfor companies to be able to succeed. Tools can only be useful when contractorsunderstand the benefit from three major levels of innovation (see Exhibit ):

• Strategic innovation includes a contractor’s relationship to the marketthrough business development innovation. Innovative products and servicesoften position contractors differently in the market, propelling them awayfrom the gravity of commoditization.

• Operational innovation includes a company’s initiatives to embrace newtechnologies and systems. Some companies have adopted GPS technologies,productivity improvement, BIM systems, prefabrication, software or newtraining initiatives to improve facets of getting or doing work.

• Tactical innovation focuses on the technical details around project meansand methods innovation. Depending on the sector of work, field managersand technicians spend time identifying the best methods to reduce labor or equipment needed to accomplish the same tasks. For an equipment contractor, it may include equipment positioning, sizing or skill sets.

If contractors are able to overcome some of their institutional biases againstchange, they become much more able to penetrate new markets and find new customers, while adapting to the market and creating a distinct value proposition.Avoiding competition in the commoditized world should be every contractor’sNew Year’s resolution. Few of us have a natural instinct to experiment like formerDallas Cowboys’ coach Tom Landry on the football field, when he perfected thegroundbreaking flex defense and then later came up with multiple offense schemes to attack those very flex defenses. His ability to innovate and considernew approaches to an established set of practices resulted in many victories.

Exhibit 1

Levels of Innovation

Strategic

Operational

Tactical


In the same light, we see contractors building success through innovation usingfour tools. These tools (see Exhibit ) create a practical approach to implementinnovation and add value and include:

• Skills • Systems • Strategic Awareness • Style

Combined, these tools can help change the trajectory of the company andcreate an evolutionary company that encourages and implements creativity andinnovation successfully.

SKILLSA great amount of discussion is given to training in the industry, yet training

is often simply a series of one-hour lectures, inconsistently presented, with littlefollow-up or reinforcement. Skills are the applied result of effectively integratedtraining programs. Developing and expanding skills can take many forms and may include online learning, external colleges, internal experts as trainers, etc.While each position in a constructionoperation has hard and soft skills, thelist below focuses primarily on the soft (leadership/communication) skillsneeded to build an effective culture ofinnovation. Despite many argumentsabout great innovators being born,(i.e., creative mind-sets and artistic personalities have a predisposition to innovation) we have found thatmost of these skills can be taught andled by example.

The business leader establishes the company’s operating methods and procedures. He or she sets the direction for others to follow and helps build relevance around the vision. This distinct position truly sets the tone for how thecompany regards innovative activities but requires action to implement an innovativeculture effectively within the company. Having a broad understanding and visionof where the company is going and effectively (and often) communicating it arekey skills that often can be learned with some executive coaching. Knowing howto lead this cultural transition takes patience and process.

Key leaders and managers must be able to encourage pushback from theirsubordinates. This requires a different approach to leading. Typically, contractorsare ripe with biting sarcasm and high control methods. Leaders must understandhow to attain results differently. Finding a true balance between allowing new ideasand questioning how things are done, while maintaining a foot on the acceleratorand ensuring success, takes mature individuals and often, new skill sets. Building

Exhibit 2

Tools for Results

Results

Skills

StrategicAwareness

Style Systems


trust in subordinates is crucial and can be trained over time. Learning how to askopen-ended questions or getting feedback from peers in a -degree assessmentare tools that can help leaders and managers obtain skills necessary in this transition

between old (top-down) and new (participative innovation).

Operators, technicians and foremenprobably face the most significantchange in their thinking. As trade and technical experts, they focus on “how things are done.” They are hard-wired in trade knowledge and skills to execute assignment completion effectively. In their development over

the years, they have built a muscle memory that the industry requires in order to be successful under great stresses. On certain occasions, this can be a barrier toconsidering new methods since it encourages business-as-usual thought. They mustbe able to balance getting things done with consideration for new and better waysto execute (See Exhibit .)

In the s, Brickman Group, a national landscape maintenance firm, shiftedfrom an install-only, new-construction model to a maintenance, contract-basedbusiness. This fundamental transformation in the organization happened during a downturn and was successful because of the leadership of the founders. Skilltraining led the way in the transformation. Operating leaders went through thoroughsales and financial training to get to know their customers and understand the cost of operations. Brickman built offits high-quality customer orientationand reinforced these company fundamentals with training. Duelargely to this focus on new skill training and implementation, Brickmangrew from a geographical focus inChicago to successful operations withsmall business units and branches concentrated on customer service inmore than states.

SYSTEMSMany contractors find that

systems actually create more room forgreat ideas. This seems contradictory.Effective systems force managers andleaders to regularly step back from a“here’s how it is done” mentality andsee the company from a different perspective. Senior leaders should try to drawparallels and demonstrate insight from the valuable outside perspectives. As workis done following these systematic discussions, senior leaders can look for applicableideas in-house, strengthening the “gain” from the sessions.

Effective systems forcemanagers and leaders to regularly step backfrom a “here’s how it isdone” mentality and see the company from a different perspective.

Exhibit 3

Balancing Act

Influx of Great New Ideas

“Get it Done” Mentality


One simple example performed by most contractors includes pre-job planningand post-job reviews. Often these meetings are held and companies “check thebox” rather than using these meetings as a learning opportunity to share goodideas. The organized time spent preparing for and following up after projects iskey to thinking through more innovative methods of executing work. Leaders mustset conditions for success at the meeting and allow experienced superintendentsthe opportunity to share their successes and challenges on projects. Done well, this approach allows the project teams to see themselves more clearly and theirperformance from a nearby hilltop, rather than just in-the-trees-daily, there’s-one-way-to-do-it execution.

Many innovative contractors have developed common systems tohelp facilitate ongoing learning andassociation of new ideas. Some ofthese examples include:

• Quarterly meetings to identifyand invest in new strategic andoperational ideas.

• A template or gate system toallow these opportunities toflourish, while keeping thepotential loss at a minimum.

• Task forces of junior managerswho regularly stand and deliveron the status of new opportunities.

• Partnering programs to create an employee exchange with the industry toinclude IT, manufacturing or the military, to bring in fresh ideas.

• Identifying customer training programs and getting senior leaders involved(this often works with manufacturing and Lean training.)

• Collaborative methods to handle operational challenges and even safetyproblems.

• Obtaining Generation Y intern feedback after the first days, as if theseinterns were consultants conducting an evaluation of the company’s efficiencies. This should be done with advance notice to the interns at thebeginning of the period, not as a pop-quiz at the end of the term.

• Knowing customers’ pain points, which often rely on systems (SRMs,CRMs, Sales Meetings, etc.)

• Best-in-class operational policies and procedures that are researched, implemented and expanded as the situation shifts.

• Regular external education programs, with projects assigned to attendeesfor follow through with stand-and-deliver sessions.

Some of these systems are commonplace and simple to implement, but requirea frequent forum to focus on innovation. Most effective companies integrate theseideas seamlessly in their day-to-day operations. While taken for granted, ensuringthe company has best practices and systems to execute flawlessly and consistently


is essential to executing new ideas. Without ability and expertise in great operations,even the best ideas will fail. Excellent execution is a precondition to implementinginnovative ideas.

A large electrical contractor emphasizes quality control to such high standardsthat it has ingrained these rigorous quality control procedures into every project. It then continues this initiative with the development of a senior leader as full-

time quality control supervisor whosepermanent role is to inspect, train andcoach division managers on properand effective implementation of these standards. The contractor holdsregular sessions for company leadershipto catch trends and look for new andimproved methods, which constantlyimproves the quality motto of thecompany in the eyes of its customers.Over time, it even made its customersaware of the quality control standards,deficiency reports and correctiveactions. Such candidness is not normally expected when working

directly with general contractors on private projects; yet this approach hasadvanced their reputation and profitability. Even more so, it creates a thoroughdialogue with the customers that allows for creative brainstorming and additionalvalue engineering for future projects. This systematic process serves as a systematictool towards innovation.

Routine perspectives brought in from outside industries generate stimulationthat drives innovation. Contractors that perform work in manufacturing plantscan learn firsthand the value of ISO and Lean processes in a manufacturingsetting. Many have taken the same principles and found benefits to their ownbusiness. Some contractors have gone so far as to certify ISO annually fortheir own advantage, not because it is mandated by some agency or customer.Other outside perspectives and business practices found within the IT communityand the Department of Defense canprovide contractors with benefits frominnovation when adapted properly totheir own businesses. Many companieshave adopted safety standards and best practices imposed by the Corps of Engineers in their commercial orprivate work.

A large mechanical contractor wasone of the first to adopt buildinginformation modeling (BIM). It startedas a test case with minimal investmentand quickly grew into an effective way to reduce costs and communicate

Routine perspectivesbrought in from outsideindustries generate stimulation that drivesinnovation.


effectively from design to the fabrication shop. The tools surrounding prefabricationand BIM created an environment where even line operators could make suggestionsfor innovation. The company has systemized incentives, programs and processesto continue improving this proficiency.

STRATEGIC AWARENESSExecutive leaders within any organization need to be concerned primarily

with the overarching decisions that affect the company’s foundation. This strategicawareness ensures that the company is following the appropriate course and isflexible enough to persevere through unexpected challenges. A long-view approachis the essence of leadership. While senior leaders spend more time focused on thisinformation and these decisions, it is important that managers share in some ofthe long-term implications of situational understanding.

Many companies have found over the past three years that a number ofemployees and managers do not understand or manage budgets appropriately forsuch a tough market. While many senior leaders beat the recession drum, after hearing it once or twice,employees tend to gloss over and justassume new cost-cutting initiatives are beginning. Improved results can be reached when specific details are discussed and updated, such as sharing information about new rules and regulations in health care, environmental regulations and building codes and how they may impact the company. Other discussions can cover changes in customer budgets, initiatives andneeds. Generally, sessions like thisshould compliment regular companyupdates that share information aboutbacklog, initiatives and applaud company success stories. The idea is to make all employees more aware oftheir surroundings. With this effort,they are more able to sense change and provide information to key leaders about the changes they are seeing at their level. It is akin to having scoutsout on a mission. These valuable scouts help refine the plan’s intelligence when the environment or direction is uncertain. Scouts must know both what they arelooking for and at in order for them to return with vital information.

In creating a strategic awareness throughout the company, leaders facilitate an environment that sensitizes employees at all levels to their customers and themarket. All employees can then focus on customer needs and think through howto add value. Rather than just renovating another storefront, superintendents are

The idea is to make allemployees more awareof their surroundings.With this effort, theyare more able to sensechange and provideinformation to key leaders about thechanges they are seeingat their level.


more keyed into the customer’s world and specific needs. This allows them tobuild relationships directly and become more aware of value as perceived by thecustomer. This information, collected across the market and shared, becomes vitalto help the business leaders make strategic decisions about customers, markets,services and future plans.

Another benefit from ensuring the company has a shared vision is that itenables a strong and unified culture within the organization. The company’s overallgoals and aspirations are more reachable through each employee’s individual performance towards the shared vision. Shared visions are important because theyhelp motivate and inspire the entire organization. Many companies without ashared vision reflect the volatility and uncertainty of this economy, and their managers find it difficult to lead effectively. A shared vision allows employees torely on at least one certainty amid the flood of media information they absorbeach day. The organization gains higher levels of dedication by allowing its

employees to persevere with a commonpurpose through difficult situations.

Implementing a shared visionmeans developing buy-in throughoutthe company. The leader must be ableto influence the employees’ dedicationto the company and its goals. Thecompany needs to be able to appeal to the employees’ aspirations by reinforcing the importance of eachemployee’s individual performance.Being able to show how each employee’s aims and ambitions relateto the company’s shared vision beginssparking the creative and innovativejuices as the employees develop passionfor the company’s progress. A sharedvision connects the company with theworkforce and encourages individualcontributions. These methods areimportant to achieve successful buy-inthroughout the company.

Top firms targeting work in thehealth care sector, for example, findsuccess with the development ofaccount managers. Persons filling this

role study the customer needs, markets, budgets and industry in order to knowthe company’s customers better than the customers know themselves. This expertmanages the relationship between the two businesses and ensures the contractor’sbest foot is forward. Often he or she orchestrates and manages the zippered relationships between companies. The deliberate pairing of functional areasbetween contractor and client creates a series of relationships that combined, allowsfor improved business development. An example pairing may involve estimators

Shared visions areimportant because theyhelp motivate and inspirethe entire organization.Many companies without a shared visionreflect the volatility and uncertainty of this economy, and their managers find it difficultto lead effectively.


developing relationships with facility management staff; a CEO, with the board ofdirectors; the superintendent and project manager, with the inspection staff; andCFOs, with accounting staff. Such zippered relationships provide no value if thecontractor does not debrief each party regularly and share information learnedabout new spending programs, budget changes or renovation needs. The structuredeveloped with the account managereffectively creates a strategic awarenessabout the customer that allows for creative problem solving to benefitboth the contractor and client.

A national general contractoradopts strategic awareness through anintegrated strategic planning process.Young project managers often shoulderthe load to understand market insightsand research that then is presented to senior leaders during the build-upto the planning sessions. They getvaluable insight into senior-leader-levelthinking because of their hard workand gain exposure to help shape their own futures. The sentiment the contractor follows is that in years,the junior leaders will have to live withtheir decisions and will provide the best recommendations possible. As a result,the company gains better developed junior leaders, creates a shared awareness ofits markets that fosters better cost control of its projects and in some cases, bringsnew perspectives to the table.

STYLEOften the development of skills, systems and strategic awareness creates a

gradual change in behavior across the company, resulting in an improved culture.Done well, these tools create a culture of an excuseless environment where juniormanagers feel as though they can control their future. The integration of thesethree items creates momentum that must be continually fostered by senior leaders.Over time, the culture of the company shifts and otherwise hardened veteransmore readily share great ideas.

In some ways, most companies have these instincts already operating at the project team level. Since many companies allow project managers and superintendents to run projects autonomously, many adapt best practices based onwhat they have seen from other companies. Most adopt ideas and systems thatsimplify work needed to attain success. These individual “pockets of creativity”across the business can result in every project site having a different “best practice”or great set of ideas. Leaders must foster that innovation and expand those efforts.At the same time, a collective application of those best ideas across the entireorganization will improve output and quality, rather than letting them reside in afractured manner. The new culture must be a bigger movement of sharing what

Often the developmentof skills, systems andstrategic awareness creates a gradual changein behavior across thecompany, resulting in animproved culture.


does and does not work across all projects. This shared awareness and regularacknowledgement of different methods can become a heated conversation, yetleaders who encourage and control this ongoing debate improve the entire companybased on that dynamic tension.

Changing culture takes time for most contractors. It is similar to turning alarge ship and requires much leadership. Its importance cannot be understatedsince it is a success multiplier. The workplace culture directly affects the employees’motivation, dedication and commitment to the company.

While building and reinforcing an innovative style can be done with thebuilding blocks mentioned above (Systems, Skills, Strategic Awareness), it makessense also to work on the company style. Most companies were formed in theimage and mirror the personality of their founders and leading influencers. Muchlike conducting a leadership assessment to learn what others perceive of your

leadership skills and abilities, it is crucial to face the music and get anassessment of the current companyposture and perspective on innovation.If the leader of the business has a “notinvented here, so we won’t implementit here” mentality, it will be quite difficult to create this culture. Thisintrospective look at the personalitiesof leaders is an effective starting point on the path to awareness. Thisintrospection should filter future decisions on hiring and promotions ifan innovative style is a priority withinthe company.

Examples of style in practice often can be found in some largercompanies. Take one national contractor as an example. Headquarterswas known for creating paperwork,adding requirements and relentlessly

saying no to every request or suggested exception. The nickname the field has forthe headquarters is the “Noquarters.” Staff functions are similarly labeled behindtheir backs. This stuck-in-their-ways attitude pervades some cultures and serves as a perfect example of what not to be.

Take Hilti Corporation as a great example of a culture that has successfullyaccepted innovation focused on the customer. Adopting the personality of thefounder, the company grew by always putting the customer first. Rather thanbeing only a great tool manufacturer, Hilti focused on understanding customerneeds. To this day, “Customer” is the first of its three core values. This supports its strategy as the company continues to get closer to its customers and developrefined tools to solve its problems. This customer-focused strategy separated itfrom its competition and created great value in the Hilti name as an innovativeprovider of value-added solutions. It has translated into a corporate structure that

Changing culture takestime for most contractors.It is similar to turning alarge ship and requiresmuch leadership. Itsimportance cannot beunderstated since it is asuccess multiplier.


includes local sales representatives, and, not surprisingly, at the top of theorganizational chart is the customer.

CONCLUSIONIn the past, many fixed

mentalities have limited contractorsfrom considering creative approaches.Innovation has a valuable place in the construction industry and the contracting organization. It can add value not only to the customerapproach and market positioning, butalso in both operations and tacticalapplications on the ground. Creativityand innovation flourish when the employees are committed to the company and its direction. Companies that are excellent in operations tend to implementinnovative ideas more effectively. The workplace culture must be led to encourageemployee buy-in. It cannot be commanded through a memorandum or rousingcompany speech.

Instead, organizations have found success using an appropriate combination oftools to include skills development, creating a strategic awareness across the companyand developing regular systems as well as active development of a company style.The change does not happen quickly, but is well worth the investment, resultingin improved execution, better market positioning and increased profitability. �

Jim Schug is a consultant with FMI Corporation. He may be reached at 813.636.1254 or via email [email protected]. Albert Watson is a consulting associate at FMI. He may be reached at 813.636.1261.

Astrong organization is based on many areas that must

come together in a holistic way: a clear vision and

direction, good decision making, delegation, collaboration,

fully engaged staff, professional development, leadership succession

plans, a healthy corporate culture, the diversity of ideas to remain

innovative and the agreement on direction to move forward.

In spite of best intentions, difficulty with executing the strategic plan is common. Many executives at design or construction firms find it exciting andcreative to brainstorm the strategic plan, but when it comes to execution, the planis sidelined by the demands of daily routine. “We changed our process after ourstrategic planning facilitator told us, ‘You have great ideas, but your firm isn’t handlingthe execution well,’” said one CEO in FMI’s A/E/C Executive Survey.

Researchers at Booz & Company reported in the June Harvard BusinessReview that executives and staff at three out of five companies surveyed said theirorganization is weak at execution. When asked whether they agreed with thestatement, “Important strategic and operational decisions are quickly translatedinto action,” most answered “No.”

Brian Lassiter, president of the Minnesota Council for Quality, presentedequally discouraging numbers in his online article “Why is Executing Strategy So

By Steven J. Isaacs and Karen L. Newcombe

Future Strategies: Part 3 — Execute the Plan

A well-run firm takes a holisticapproach to strategic planningand its execution. Ideally, these are not special events, but everyday practices.

we need to shorten the sub info

62 � future strategies: part 3 — execute the plan

Hard?” He described a survey conducted of business leaders from variousindustries in Minnesota, of whom % were not confident in their organization’sability to execute its strategy. When asked to identify the primary barrier that stoodin the way of successful execution, % of the survey participants identified “pasthabits” as the main obstacle. These executives listed additional hindrances similarto those identified in numerous other studies, such as unclear accountability, organizational inertia or internal resistance to change, and a lack of buy-in on criticalactions needed. Adherence to habit and the need to address regular workloads

seems to drain new initiatives ofmomentum and stalls the execution of strategies. In short, people have aroutine and change makes themuncomfortable.

HOW TO BREAK THROUGH THEINERTIA BARRIER

One of the best methods for overcoming inertia when confrontedwith something new is to address it with methods that are more comfortable — move it into familiarterritory to make it accessible andactionable. For architects, engineersand constructors, nothing is morefamiliar than “the project.”

Putting the execution of the strategic plan with the familiar methodsof project management makes it morelikely that action will be taken on adaily basis. Assigning a project managerthe responsibility for a given area, withgoals and timeframe laid out, puts afamiliar face on the abstraction of the

strategic plan. Like a design or construction project, many groups contribute to thestrategic plan’s success, and it takes a team to make it successful. With a projectmanager in charge, and everyone in the firm clear about his or her responsibility inimplementing the plan, execution can be given the same level of priority as clientprojects. By giving the elements of the strategic plan a familiar format for execution,they gain the necessary priority to ensure action is taken on a regular basis.

The project manager responsible for implementation of any given area has the same responsibilities that he or she does on client projects. If a project manager has to watch what changes on a project every day, then whoever is incharge of implementation also has to be on top of ongoing actions to keep theplan moving forward.

Accountability and regular reporting help project managers keep client projectsand teams on track, and these practices are equally useful in executing strategicplans. Freese and Nichols, the Ft. Worth-based engineering, environmental and

Adherence to habit and the need to addressregular workloads seemsto drain new initiativesof momentum and stalls the execution ofstrategies. In short, people have a routineand change makes them uncomfortable.


architecture firm, has a detailed strategy accountability and reporting process available online.1 As a winner of the Baldrige Award, the firm has developed a rigorous cyclical process that runs through a -month period. Strategic deploymentuses both short-term and long-term action plans, with different teams assigned totake responsibility for various efforts,and individual goals spread across the organization.

Each group is responsible forplanning how best to achieve its goals,and every team gets a weekly actionplan that shows tasks, assignments anddue dates. A strong reporting processdocuments progress on actions andstrategic measures are determined foreach area, so that both performanceand impact on the firm can be tracked.2

“Our strategic plan can includesubset plans for developing new oremerging areas of business, using anew business plan template,” saidGordon Wells, COO at Freese and Nichols. “One of several emerging areas wehave done this for is levee work, where we design, inspect, rehabilitate and soforth. We identified specific areas where we felt we could effectively get involvedand further identified the qualifications needed for a person to serve as a champion.Frankly, we didn’t expect to find anyone right way, but about six months intodevelopment of our ‘Levee Business Plan’ a gentleman we had worked with foryears became available, and we began discussing the possibility of his joining us tobe our ‘Levee Champion.’ With our business template already prepared, we wereable to demonstrate to him what we were planning, and he accepted a position.Since then, he has used the plan as a starting point and successfully built this newarea of business into an already-profitable and rapidly growing unit.”

DECISION RIGHTS AND INFORMATION SHARING ARE TOP FACTORS IN SUCCESSFUL EXECUTION

A project manager would be unable to function if he or she did not have theauthority to make day-to-day decisions about the project. Most projects wouldnever get finished if every decision had to be passed back up the line to the firm’sCEO, or if the project manager was so concerned about being second-guessed thathe or she deferred making any decisions at all.

Yet many firms that routinely give project managers wide-ranging authority to make project decisions seem not to grant clear decision rights when it comes toimplementing the strategic plan. The lack of clarity about decision rights is one ofthe top factors in stalling the implementation of strategic plans. The Booz Allenstudy cited previously also showed a marked difference in approach to decision rightsbetween firms that are strong on execution, earning high marks for clarity aboutwhat decisions and actions each person was responsible for. Those firms that wereweak on execution had low marks for clarity about actions and decision making.

The lack of clarity aboutdecision rights is one ofthe top factors in stallingthe implementation ofstrategic plans.


However, decision rights as the top factor in successful execution does notstand alone; a strong and fast communication and information sharing system isthe complimentary component of this dynamic duo.

“There is a difference between how quickly information gets to headquarters ingood and bad organizations (% to %),” says the Science of Strategy Institute

in its online article, “ExecutingStrategy,” that reports on a study done at equipment maker Caterpillar.3

“Research found that the higher decisions were made in the hierarchy,the poorer the quality of the decisionwas ... in a fast-changing world. Thebureaucracy is always behind theinformation curve ... the more decision making was moved down in the organization, the better the information passed to headquartersbecame. They [the researchers] cameto the conclusion that ‘the way to

ensure that the right information flowed to headquarters was to make sure theright decisions were made much further down the organization. By delegatingoperational responsibility to the people closer to the action, top executives werefree to focus on more global strategic issues.’”

These processes of delegating decision rights and setting up an appropriateinformation flow tend to occur naturally for client projects. The familiarity of thisformat gives design and construction firms an advantage in implementing thesesame processes for the strategic plan.

The firm’s leaders and those chosen to be the project managers for the strategic plan have to become librarians of information, actively disseminating theinformation through the firm.

In the same way that project meetings are designed to bring everyone up-to-date, setting up regular project meetings for the strategic plan will help keep everyone involved in execution informed and initiatives on track. This is also theopportunity for the leader to monitor individual progress and address new thoughtson direction. This free flow of information also helps familiarize young managersand future firm leaders with the varied aspects of the firm’s operations.

Other processes and tools that are used regularly in any client project can bebrought to bear on the strategic plan project, such as the plan/do/check/act cycleof quality control.

MAKING EXECUTION A PRIORITY Another characteristic of design or construction projects is that they have

priority: there is a contribution from the company of time, dollars and energy as well as contributions from the individuals on that project of time and energy.Successful execution of the strategy requires the same.

Martha LaGace, in her introduction to a Q&A session with Robert Kaplan,creator of the Balanced Scorecard, said, “Companies often manage strategy in fits


and starts. Though executives may formulate an excellent strategy, it easily fadesfrom memory as the organization tackles day-to-day operations issues, doing what Harvard Business School professor Robert S. Kaplan calls ‘fighting fires.’”4

In other words, a strategy that is pushed to the back burner by daily issues willnever be accomplished.

A strategic plan cannot be successfully executed in short spurts. It must begiven the same thoughtful time that is given to design work, and it requires thesame creativity that a project requires in developing good solutions and innovatingways to solve challenges.

Seven years ago, we worked with SERA Architects, headquartered inPortland, Ore., to create a new strategic plan. The firm had staff members atthe time and a local focus. During the planning session, it set the ambitiousstrategic goal of becoming one of the most prominent sustainable-focused firms in the nation.

“We decided to take the approach of all green, all the time,” said Bing Sheldon,chairman and principal of SERA. “A majority of our projects are now aimed atachieving LEED certification, and webegin incorporating this very early in the design, looking at the full rangeof elements involved, from buildingorientation to building financing,from energy modeling to the chemicalcomposition of materials used, andwhether those materials can be recycled in the future.”

The firm learned that to make the case for green building to clients asdiverse as universities and developers,it needed to be able to advocate with a full body of knowledge on top of thedesign thinking and practices taught atthe university. Gaining this knowledgerequired the commitment of everyoneon staff to learn, participate in publicpolicy work and personally commit to sustainability. Staff members soughtout public transportation alternativesand have changed their use of energyand resources.

Within five years of setting itsstrategic goal, SERA was named No. on Architecture Magazine’s list of the most sustainablearchitecture firms in the U.S. It accomplished this through leadership with passion— but that leadership and passion extended throughout the firm. Employees gaveof themselves and devoted massive amounts of creative energy to strategic execution— they gave execution of the strategy equal weight to the firm’s projects.

A strategic plan cannot be successfullyexecuted in short spurts.It must be given thesame thoughtful timethat is given to designwork, and it requires thesame creativity that aproject requires in developing good solutionsand innovating ways tosolve challenges.


The satisfaction the firm and its staff derived from this accomplishment hasgiven it the impetus to form a new strategic plan for the future, with even largerfar-reaching goals.

STAYING UP TO SPEED KEEPS EXECUTION MOVING FORWARDThe opening session of our Project Management program for architects and

engineers starts with a simple exercise: The young project managers are handed acopy of the newspaper and asked to find one thing in the news that will affecttheir current project and one that will affect their firm. The students typically have been so busy working on the latest project that they have often lost track ofcurrent events and are surprised when they invariably find a news item with animpact on their project or firm. This “heads-down” approach to project managementbrings with it the risk of being blindsided when something happens that affects aproject or, for firm leaders, when something occurs in the business, economic orregulatory environment that the firm cannot respond to immediately.

One of the primary challenges firms face now in executing their strategicplans is the tremendous pace of change in market, technological and economic

conditions. Firms must stay up tospeed on current conditions and be prepared to respond creativelywhen changes or challenges appear,regardless of size, age or market focus.The economy may be slow-movingnow, but that has not reduced the pace of technological change, the drive towards sustainable design andconstruction, or the great demographicand political shifts going on worldwide.

Consider appointing a “TrendsScan” team, who is assigned to monitor and report regularly on market conditions, client needs, technology and economic trends aswell as additional areas specific to thefirm. Design and construction firmsare full of creative, intelligent peoplewith a wide range of interests. Leveragethese interests on behalf of the firm.

For example, the firm’s biggest “first adapter” of new technology is a good choiceto report on new developments that could make the firm more efficient or mighteven be game changers: New work at MIT promises to result in giant constructionprinters that will “print” an entire building, including fenestration and conduitspace for utilities.

The board should include a regular review of trends that affect the firm inevery board meeting, and everyone in the firm should be encouraged to bringtrends to the attention of firm leaders. Again, strong information sharing acrossthe firm has a direct correlation with the success of strategic plans.

One of the primarychallenges firms facenow in executing theirstrategic plans is thetremendous pace of change in market, technological and economic conditions.


Using a scenario planning process as described in part one of this series (FMI Quarterly Issue , )to analyze the trends and arrive at astrategic plan can give the firm a creative foundation of alternativeapproaches and ideas that can becalled upon to address unexpectedchanges. Scenarios can help create clarity from complex data, trends andopinions and give planning teams away to look at possible futures.5

EXECUTION IS PART OF EVERYDAY OPERATIONS

To give plans the best chance ofbeing implemented, take creative stepsto place execution within the scope ofeveryday operations, such as making execution itself a project with the same levelof priority, staff time and resources as a client’s project. Ensure that decision rightsare clearly delineated and that information sharing and communication havestrong methods for the flow of information. Stay on top of changes going on bothin the larger world and your client communities to avoid being caught off guard,and be prepared to adapt as conditions change. A strong organization with a holisticapproach has the clarity of accountability, forward momentum and adaptability tochange that make execution possible. �

Steven J. Isaacs is a division manager for Architecture and Engineering Consulting Services at FMICorporation. He may be reached at 925.934.7200 or via email at [email protected]. Karen L. Newcombeprovides research on trends, opinions and the future of the industry as well as writing and editing. She has

worked in the A/E/C industry for 25 years and currently assists on various FMI projects. Email Karen at

[email protected].

1 The Freese and Nichols Baldrige Award Application is available for download at:

http://www.baldrige.nist.gov/PDF_files/_Freese_and_Nichols_Award_Application_Summary.pdf2 For more on Freese and Nichols’ Baldrige Quality Award, see FMI Quarterly Issue , , “Firmwide Quality: Pursuing the

Highest Standards.”3 Science of Strategy Institute, “Executing Strategy,” Website: Sun Tzu’s The Art of War and its Rules for Winning Without Conflict.

http://www.scienceofstrategy.com/main/content/executing-strategy.4 LaGace, Martha. Harvard Business School Executive Education, “The Execution Premium: Linking Strategy to Operations for

Competitive Advantage.” http://www.exed.hbs.edu/assets/Documents/operations-strategy.pdf.5 Isaacs, S. & Newcombe, K. Future Strategies: Part — Research and Idea Generation. FMI Quarterly ( #).

Successful contractors are responding in creative ways to

today’s challenging operating environment. They are seeking

out new markets and geographies to create and capture value.

In addition, new techniques, delivery methods and construction materials

all introduce fresh elements to the traditional construction process.

FMI’s Rick Tison recently spoke with Michael Davis, director of ProfessionalLiability Products at Zurich North America Construction, about the impact ofthese changes on managing risk in the construction process and how best-of-classfirms are responding.

Tison: There are many new things going on in the construction and engineering industries — from production techniques, delivery methods and construction materials to firms entering different markets and geographies due tothe economic climate. What are your customers doing differently because of this“newness”? Are they embracing change or are they being more cautious?

Davis: Our customers are absolutely embracing these changes. Innovation is good. Value engineering often drives the use of these new designs, materials andtechniques. It is intended to save money as well. We have customers who will beon the cutting edge, but at the same time, we expect those same customers willapproach these new ventures in a thoughtful and prudent way.

By Rick Tison

New Game, New Risks

Contractors must remain vigilantto change, great or small, andnot lose sight of the blocking and tackling necessary to managerisk effectively while creativelyresponding to the environment.

70 � new game, new risks

Tison: Speaking of thoughtful and prudent ways, what are some of thespecifics that firms are doing well and not quite as well?

Davis: Our claim evaluations show that all project team members tend to be more conscientious when working on something that is recognized as beinginnovative. For example, they bring their “A” game for those projects that areinnovative and likely to end up on the cover of a magazine. What is not done aswell is recognizing that subtle changes can also require that level of attention butproceeding as if things were business as usual. Because of the interconnectednessof the construction process, the unintended consequence of a change in one areamay create problems in another. This can often lead to a big loss on the project.

Tison: Do you feel that interconnectedness is increasing?Davis: I think the construction process has always been interconnected.

What is changing is that the lines of responsibility are blurring. In some ways, that can be a good thing. As lines begin to blur, project team members are morelikely to remain vigilant toward potential issues that were not previously in theirsphere of responsibility. We’ve trained ourselves to be mindful of everyone’s roleand responsibilities. The fact remains, if there is a problem on a project caused

by one team member, then everyoneon the project team may be affected.Liability issues aside, the problemneeds to be addressed by all membersof the project team.

Tison: What are some of the specific challenges created by thingsthat are “new” in the constructionprocess?

Davis: The primary challenge is to expect unintended consequences.The project team goes beyond thoseparticipants that you see on a job site — it also includes finance, procurement and suppliers as well asdesigners, contractors and the enduser. Traditional insurance may notalways fit risk allocation schemes innew delivery systems such asIntegrated Project Delivery (IPD).

New man-made constructionmaterials may react differently to environmental conditions either during

storage, installation or end use than the way traditional materials would havereacted. We can do laboratory testing on new materials, but that is only going toapproximate the conditions that occur in the real world. It is also unlikely that anyproduct has been tested to see how it holds up over decades, which is often theexpectation of things being built. Even pilot testing does not guarantee success.

The fact remains, ifthere is a problem on aproject caused by oneteam member, theneveryone on the projectteam may be affected.Liability issues aside,the problem needs to beaddressed by all membersof the project team.


A change in scale by itself can introduce something new. A structure that seems identical or aprocess that is recreated on a largerscale sometimes presents new challengesand consequences that may not havehappened on a smaller scale.

Tison: You mentioned new construction materials. What are someof the other changes taking place inthe construction and engineeringindustries that are creating challenges?

Davis: There is a lot of talk andinterest around Integrated Project Delivery (IPD), Public-Private Partnerships (Ps)and global supply chains. Whenever there is an economic downturn, firms aregoing to look for new sources of work. That can mean going into new geographicareas or unfamiliar project types. It can also mean contractors buying engineeringfirms in order to move into design work or design firms moving into developmentto provide a more vertical service.

IPD has a much different approach to traditional risk and reward allocationsamong the project team members. This creates an insurance challenge since sometraditional casualty insurance products are not set up to address this.

Ps are a fantastic way to fund needed construction, but in many of thoseprojects, we see a substantial degree of interrelated, intercompany ownershipcomprising the principal entities on the project. Again, thinking how that may playout in a traditional casualty insuranceprogram can create some challenges.

The global supply chain is another challenge. The volcaniceruptions that grounded air travel in Europe and the tsunami inJapan really drove home how an interconnected, just-in-time globalsupply chain can be interrupted by suchevents and in such unforeseen ways.

Tison: In addition to the challengesof adopting new techniques, it soundslike the issue is often compounded byfirms operating outside their comfortzones as a means of surviving in thiseconomic climate.

Davis: Absolutely. It is natural towant to explore new areas as a meansof finding work. It is not an issue of whether or not a firm should do that. Instead,it is an issue of recognizing that when you make a change, either in the environment

Whenever there is aneconomic downturn,firms are going to lookfor new sources of work.That can mean going intonew geographic areas orunfamiliar project types.


you operate in or the role that you traditionally play, there are going to be surprises.The goal is to expect the unexpected and to deal with it.

For instance, we have a customer that, due to the economic downturn,moved into a completely different business model. It went from negotiated commercial work to hard-bid public work and also expanded outside its typical

region in order to find work.Unfortunately, it failed to recognizethe risk of this change and, as a result,experienced significant subcontractordefaults when it previously had none.This change disrupted the company’soperations at all levels.

Tison: How do the traditional riskmanagement approaches compare tooperating in a new environment, bothwith incorporating new techniques,technologies, etc., as well as for a firmoperating outside of its comfort zone?

Davis: In many ways, the traditional approaches stack up verywell. When we analyze a tough risk,we often find that the constructionand/or design teams are not doing thethings that they already know theyshould be doing. An example of this is

in concrete-slab construction, where we have seen a number of significant claims.The American Concrete Institute (ACI) provides clear and detailed specificationsabout the interactions among the owner, contractor and designer, regarding quality assurance and control. We think these guidelines are not always followed.

Tison: Do you feel with these claims that the involved parties are not aware of the risks and are not following the protocol, or are they aware and choosing toignore the protocol?

Davis: I think there is danger in becoming so comfortable with somethingthat you are not vigilant or are not paying attention to what you think is a low ornominal risk. Some of the loss is avoidable with very simple blocking and tackling— negotiating workable contract terms, addressing problems early and applyingappropriate quality controls. We want our construction professionals to be on theball with all of the elements of their business, whether it is maintaining technicalcompetency or facing the challenges of managing their workforce.

One risk management approach that confuses people is when we think of risk in terms of avoidance. There is a legal prudence in not rushing to admit liability, but sometimes that can cause paralysis. Then the problem gets worse. As we discussed before, although there are clearly defined roles and responsibilities,project team members still have to deal with issues that someone else on the project created. Just because you did not create the problem does not mean that

I think there is danger in becoming so comfortable with something that you arenot vigilant or are notpaying attention to what you think is a lowor nominal risk.


it will not affect your aspect of the project. There needs to be an effective meansto address the problem, even though it is not directly within the scope of your role.This is a significant service that our risk engineers can provide to our customerswhen problems arise during the construction process.

Tison: So to summarize, it comes down to two things. Project members needto understand their roles and the risks they are responsible for managing. But they must also be aware of how their role may affect the risks that someone else isresponsible for managing and how it may impact the overall project.

Davis: Yes, that as well as how to manage the impact to their work productfrom things outside of their defined responsibility.

Tison: How would you characterize the nature of these changes in the industry?The economic climate we have gone through and are still facing brought aboutdramatic changes in how businesses in our industry operate. On the other hand,some of these innovations are occurring over a much longer period. Are we facingrevolutionary shifts or evolutionary changes?

Davis: As you said, it is a mix of both. The evolutionary changes seem moredangerous to me because they can easily go unnoticed. Everyone is on his or her toes when he or she sees the project as being innovative, but most changes are subtle.Frequently, existing technologies are altered ever so slightly or firms make a minorchange to a traditional structural ele-ment, for either value engineering oraesthetic reasons. While these are notbad ideas, they sometimes result in multimillion-dollar claims becausethey did not work as anticipated.

Tison: How are the firms youwork with responding to the risksassociated with these changes?

Davis: Our customers typicallyemploy robust risk management protocols. We have the benefit of seeing how projects go wrong, and we share those lessons learned. It often goes back to basic blocking andtackling. Like in the concrete slab example earlier, the answer is right there in theACI code. Some of this may be the result of not enough qualified, competent andcapable designers and contractors available to perform the work when there was a boom in construction a few years ago. That being said, we encourage followingthe ACI code.

From a designer standpoint, how they respond to requests for information(RFIs) from the contractor is crucial. They have to recognize what the RFI meansand how they need to respond in order to keep the project on track. Subcontractorprequalification and management have also comprised significant best practices thatwe have embraced at Zurich and thus helped improve our customers’ practices.

Everyone is on his orher toes when he or she sees the project asbeing innovative, butmost changes are subtle.


Tison: Are there costs associated with these practices that may keep firmsfrom putting them in place?

Davis: Expense management is everywhere in this climate. For risk management to be successful in any economy, it has to be embedded and viewedas part of the service that the firm is providing to its customer. If it is viewed

as a necessary evil, then it has not been adopted appropriately within the culture of the organization.

It is rare that an element of risk management requires stoppingbusiness. Most of the time, risk management provides better projectresults and higher quality assurance.This helps save money, but only if youdo it properly. It takes dedication anda willingness to pay more attentionand to do the necessary blocking andtackling, which sometimes means hitting the pause button and saying,“we may have a problem here.”

From my perspective, the hardestthing for a company to do is to raiseits hand and say it has a problem.There is even greater resistance tobringing problems to the attention of the insurance carriers. There is aconcern that if it does, the insurancecarrier will view it negatively. The

truth is, we see enough of the business to understand that these problems are happening. What is important is our customers’ willingness to address these problems. When they do, we are thrilled to come in and help work through thesechallenges. We, as a company, are not risk avoiders. We know there is risk in thebusiness that we insure, and we are here to help our customers manage that risk.

Tison: How do these industry changes and innovations make you look atyour business differently?

Davis: We are always looking at these elements across all the lines of coveragewe write. One of the most challenging things in our business is trying to identifythe difference between the perceived risks that become reality versus those that donot. My favorite example of this is YK. The challenge is identifying the differencebetween YK and the discovery that asbestos causes mesothelioma. You are goingto have a lot more YKs that you are going to spend time and money trying tomanage that turn into nonevents, but you don’t know which one is going to be abet-the-company event. You still need to address and respond to them.

Tison: That seems like a rather overwhelming proposition.Davis: To some people it is. There is a danger for them in letting that lead to

One of the most challenging things in our business is trying toidentify the differencebetween the perceivedrisks that become realityversus those that do not. My favorite exampleof this is Y2K.


broad-brush risk avoidance. For some,there is a fear that they need to boilthe ocean, which makes them want torely on just one, two or three riskmanagement techniques. They thinkas long as they have good projects,clear project communications, technically competent designers orexcellent customer relations with highlysolvent customers that everything elsewill work out. All of those things areimportant. It is a lot and you cannotaddress just a handful, but you do have to start somewhere. It is an evolving process.Over time and through the course of your operation, the right amount of attentionand protocols can be brought to all those things and more.

CONCLUSIONChallenging times call for contractors to respond creatively and vigorously.

In doing so, how contractors respond to change will determine how successfullythey manage the associated risk. While bleeding-edge innovation receives the lion’sshare of attention, often the incremental changes create the greatest challenges andreceive the least focus. Contractors must remain vigilant to change, great or small,and not lose sight of the blocking and tackling necessary to manage risk effectivelywhile creatively responding to the environment. �

The information in this publication was compiled from sources believed to be reliable for informational purposes only. Any and all information contained herein isnot intended to constitute legal advice and accordingly, you should consult with yourown attorneys when developing programs and policies. We do not guarantee the accuracyof this information or any results and further assume no liability in connection withthis publication, including any information, methods or safety suggestions containedherein. The subject matter of this publication is not tied to any specific insurance product nor will adopting these policies and procedures ensure coverage under anyinsurance policy. Risk engineering services are provided by Zurich Services Corporation.

Richard Tison is a research consultant with FMI Corporation and may be reached at 919.785.9237 or via emailat [email protected].

H ealth and wellness is a hot topic for many

companies that are trying to lower rising health care

costs while at the same time improving employee

health and well-being. A healthy and happy workforce usually

translates into fewer injuries, reduced absenteeism, higher retention

rates and increased productivity, which in turn helps the company’s

bottom line.

One thing that an organization can do to promote healthy lifestyles for itsemployees is to create a workplace wellness program and embed it into the companyculture. FMI recently had the pleasure to speak with Diana Canzona-Hindman,human resource advisor at PCL Construction Enterprises, Inc., who led such aneffort at PCL. As a leader in buildings, civil infrastructure and heavy industrialmarkets, PCL is employee-owned and has an annual construction volume ofmore than billion.

PCL has been recognized by FORTUNE Magazine as one of the BestPlaces to Work for six years in a row. PCL’s employee-owned structure, wellnessinitiatives, philanthropic efforts and training programs all contributed to thismilestone achievement.

By Kelley Chisholm

Wellness at PCL: A Holistic Approach

Workplace wellness programshave numerous benefits, includinghealthier and happier employeeswho are safer, more productiveand loyal to their employers.

78 � wellness at pcl: a holistic approach

Chisholm: Please tell us more about making FORTUNE’s list the past six years.Canzona-Hindman: For the past six consecutive years, PCL has been on

FORTUNE’s Best Places to Work List, and we are extremely proud of thisrecognition. The Great Place to Work (GPTW) Institute actually manages the process for FORTUNE, and each year the GPTW Institute hosts an annual conference. At the conference, companies that have made the list or are currentlyon the list are asked to give presentations.

Last year, PCL was asked to be a speaker at the conference for the secondtime, and our session focused specifically on our culture of wellness. We took

a strategic approach with our presentation, but also gave the audience some tactical information.Many times people want to returnfrom these conferences with turnkeyideas because creating long-termchange happens over time.

After the session, many audiencemembers came up to talk to us andasked more questions. They wereappreciative that we spoke to both thestrategic process and the tactical piecesso they could implement these ideasand see immediate impacts.

Chisholm: I think that is great for our readers to see some of the tactical information and see what isactually involved in establishing a wellness culture.

Canzona-Hindman: Most of thewellness initiatives we put into placewere either no-cost or low-cost andvery easy to execute. Providing freshfruit each week for our employees for . was one of the first wellness

initiatives we implemented. It’s, pardon the pun, the low-hanging fruit that youcan use to start working toward your wellness journey. In addition, we wanted to integrate our wellness approach into our culture and not have wellness be aprogram or “flavor of the month.”

Chisholm: What was your motivation to integrate wellness into PCL’s culture?Canzona-Hindman: People are the real motivation; they are our biggest asset.

We truly believe that at PCL, and we are committed to their overall health, safetyand well-being. We try to accomplish this through excellent medical, dental andvision plans, on-site health screenings, ongoing wellness education and awareness,work-life balance options and a comprehensive safety program.

We also are motivated through our employee-ownership model, where %

We are motivatedthrough our employee-ownership model, where95% of employees arethe owners of PCL.Being owners, we areattuned to what thecosts are to run ourbusiness, along with ourprofitability, because weare personally affected.


of employees are the owners of PCL.Being owners, we are attuned to whatthe costs are to run our business, alongwith our profitability, because we arepersonally affected. We are aware ofthe rising health care costs, and thatcertainly was a motivation. Productivityimprovements, along with reducedabsenteeism and presenteeism, wouldbenefit our bottom line.

The need for employees toembrace wellness was essential ultimately to have a positive impact to the rising health care costs. Severalyears ago, the director of HRapproached the senior leaders and said,“You know, we really need to start conducting on-site blood pressure and healthscreenings.” However, at that time, the senior leaders did not approve the request.

Chisholm: How did you go about getting senior leadership buy-in?Canzona-Hindman: We conducted more research and compiled additional

data because the information confirmed what we suspected. The health-cost trendswere continuing to rise, and implementing health screenings and other wellnessinitiatives would have a positive ROI in three to five years. We wanted to assistemployees in becoming more aware of their risk factors and advocate for theiroverall health and well-being.

We worked in collaboration with the American Cancer Association, whichcame in and conducted a worksite environment study at no cost to us. We looked

at different practices throughout many different organizations, includingsome of our competitors, to see whatbest practices they were using in thearea of wellness.

After extensive research, anotherproposal was presented to senior leaders. The proposal included annualhealth screenings for the employeesand their spouses, which would bepaid by PCL. In addition, our districtswere offering free on-site flu shots, but not in a consistent manner. Therecommendation was that on-site flushots be conducted annually to havebetter attendance.

Tobacco cessation was addressedthrough recommending enhancementsto our medical health plan to have

We wanted to assistemployees in becomingmore aware of their riskfactors and advocate for their overall healthand well-being.


all tobacco-cessation-related treatments and prescriptions covered at %, including waiving plan deductibles and including nontraditional treatments suchas acupuncture and hypnosis. These enhanced benefits included coverage foremployees, spouses and dependents.

Another component to the wellness proposal was to reimburse employees for exercise costs at gyms because we did not have room for exercise facilities atour offices.

The recommendation suggested having ambassadors within each of the districts provide continuous education and awareness about disease management,nutrition and exercise, using the philosophy “Tell them about wellness, tell themagain and keep telling them until it becomes a habit.”

Chisholm: What sort of message were you trying to send to senior leadershipwith these recommendations?

Canzona-Hindman: We wanted our senior leaders to know that we wouldhave a healthier and fitter workforce, which would have positive financial outcomes.

In addition to having better financial outcomes, we wanted a culture of wellness that is just like our safety culture. You don’t go on the job without doingcertain exercises or wearing safety glasses or gloves. We wanted wellness to be apart of our employees everyday thought process.

Chisholm: I like what you are saying about making this a part of the culture.Many companies have recognized the importance of having safety ingrained intotheir culture, and we are beginning to see this with ethics as well. Embracing wellness as part of your culture instead of just another “flavor of the month” is the way to go to get people onboard.

How did the senior leaders react to this proposal?Canzona-Hindman: We anticipated many questions, conversation about

ROI and some reluctance with the cost. The proposal was presented along with a timeline for implementation and funding requirements. Human Resources wasready to go; all we needed was its approval and buy-in. The COO said, “You

know, this is absolutely the right thingto do. Go do it.”

Chisholm: It sounds like yourresearch paid off. What were your next steps?

Canzona-Hindman: We needed toimplement everything that was coveredin the proposal with excitement, energy and enthusiasm. From day one,we needed to integrate wellness intoour culture. Our vision, values andprinciples were used to guide usthrough the process. An inventory ofour current programs was already inprogress, and we needed to connect all

We wanted our seniorleaders to know that wewould have a healthierand fitter workforce,which would have positivefinancial outcomes.


the dots for employees to ensure that implementation did not look like anotherprogram add-on, and then we had to come up with a theme to create our ownwellness brand. We looked at our vision statement, which states PCL wants to berenowned for excellence, leadershipand unsurpassed value in everythingwe do. We said, “OK, this fits well.”

Then we looked at our values andstarted highlighting where wellnesstouched. Our values say, “We arealways looking for new opportunitiesto learn, improve, teach and addvalue.” Wellness is certainly an opportunity to teach our employees.“We lead by example at PCL,” so asan employee, if you take the lead inwellness, you are leading by examplenot only to your colleagues, but also to your family members and even your friends and neighbors in the community.

We continued highlighting where wellness intersected with ourguiding principles. “As owners, we are motivated to excel,” and it heldtrue with our health and well-being.We are all in this together. If healthcare costs are not managed andreduced, money is taken from ourown pockets. When employees understand that, it is highly motivating. There isalso the accountability component — we are going to hold you accountable foryour wellness, just like we do with safety. Safety and health, health and wellness,they all are connected.

Chisholm: It sounds like you laid a solid foundation to get your employees tobuy in to this new wellness culture.

Canzona-Hindman: Being a construction company, we used a crane as a symbolof how to build our culture of wellness. When we started, we knew we needed thesupport and buy-in from the top, which we received through the proposal process.Then, the values and guiding principles were used for the concrete foundation —teamwork, communication, mutual obligation and diversity. The crane showedthe culture of wellness starting to take shape.

Our culture of wellness embraces the entire person which has been a hugesuccess factor. Our wellness initiatives include the body, mind and spirit — the whole person. And it looks to that whole person’s life, not just at work, but at home, his or her quiet time, own self and community. If your philosophyincludes the whole person, at some point, he or she will make wellness a priority for himself or herself.

Our wellness initiatives include thebody, mind and spirit — the whole person.And it looks to thatwhole person’s life, not just at work, but athome, his or her quiet time, own self, and community.


Chisholm: This is a wonderful graphic that perfectly illustrates this concept.Canzona-Hindman: PCL has a great medical, dental, vision, EAP, life insurance

benefit package — a strong core to build upon. We needed to recreate and rebuildour wellness committees and start conducting wellness awareness and education.

The wellness inventory revealed most districts were hosting financial fitnessseminars, such as (k) education, Financial Planning or retirement planning.Flu shots were offered in some districts, but not others. All districts had various

social events, such as picnics, golftournaments and holiday parties.Research shows fun events at workhave a positive impact on people’soverall wellness because fun equates tohappiness, and happiness is associatedwith strong emotional well-being anda positive mental outlook.

Social responsibility is a key component of PCL’s culture, and manycommunity activities and volunteerevents such as paint-a-thons, adopt-a-family for the holidays, Habitat forHumanity, United Way campaigns andmuch more are held annually.

Since we were already conducting

Research shows funevents at work have apositive impact on people’s overall wellnessbecause fun equates to happiness.

Exhibit 1

How Do You Build a Culture of Wellness?

Mobility

Support From the Top

Balance• Home• Work• Community• Self

Include Whole Person• Body• Mind• Spirit

Make Wellness a Priority

Source: PCL

Diversi

ty

Social

Responsib

ility

Teamwork

Safety

Ownership

MutualObligation

Communication

Dynamic Culture

Build Using Company Values and Principles


awareness and education sessions, along with fun events and activities, I thought,“OK, so how do I leverage what we already are doing?” In addition, I thought manypeople gravitate to visual aids and icons, and we have taken our logo and adaptedit to different organizations within PCL, such as our College of Construction, and we have a logo for sustainability “Building Green Inside and Out.” So I askedmyself, “If I’m going to try to internally brand wellness, it needs its own logo; butwhat are the components that are absolutely instrumental and key to the successof a wellness culture?”

The word “key” jumped out at me, and keys are used to associate the fourcrucial wellness categories which were revealed through our internal audit. The keyareas identified would be our focus and used for internal branding, and the “Keysto Wellness” theme evolved and is used in our wellness logo.

Keys to Wellness• Physical Health and Fitness• Emotional and Mental Health• Social and Community

Well-Being• Financial Fitness

Chisholm: This is a great logo toreinforce the wellness brand.

Canzona-Hindman: Again, I think branding internally is just asimportant as it is to your external customers. Employees are our internal customers,and it is extremely beneficial to make these connections and leverage the passionsthat many people have for social activities and volunteering in community, becauseif it gets them off the couch and into the community exercising and being active,we have achieved some of our goals.

One of the first successes we experienced was hiring a nutritionist to developnutritional guidelines for PCL employees at work. Employees are at work themajority of their time, and PCL sponsors a variety of events, such as holiday parties, picnics, retirements, and fireside chat meetings. We wanted to have internalguidelines for good nutrition in the workplace, which would be available for planning meals for events and meetings that would include providing healthyoptions for employees.

Chisholm: How do you go about advertising all of this to your employees?Canzona-Hindman: We initially set up a wellness Web page with the nutrition

guidelines and hosted a conference call with the administrative assistants throughoutthe districts to make them aware of the guidelines and re-educate employees asnecessary. We try to keep our Web page up-to-date and re-emphasize the nutritionoptions through emails and the wellness teams.

The nutritionist also did an audit/inventory of our vending machines. Ourgoal is to have % of healthy options in the machines. We still have the Snickersbars and the cookies in vending machines; however, good nutrition is about providing healthy alternatives, so Luna bars, nuts and other healthy choices are


also available. I went to Costco andSam’s Club with the person who buysfood for the vending machines, and weread the PCL Nutrition Guidelines andthe snack’s nutrition label to educateus on providing healthier options. Weachieved our % goal.

Chisholm: It sounds like that may have taken some time, but wellworth it.

Canzona-Hindman: It is a slowprocess, and a continuous one. Ourwellness proposal was approved inSeptember ; the nutrition programguidelines were complete and postedon our intranet by November .The first health screens were that fall,where we had % participation thefirst year, which was great. The secondyear, it increased to % participation.

That first year our budget was,, which was mostly for

the health screens, flu shots and exercise reimbursement. Most educational andawareness sessions and financial fitness seminars are either low- or no-cost, simplyour time and energy.

Currently, we are trying different incentives and rewards to increase participation with the goal to get employees to be ambassadors of their own healthby understanding their health risks and health numbers. If you have high cholesterol,what does that mean? If you smoke, how does that affect your overall health, and what should you expect in the future? People have year-over-year results tocompare, which has been fabulous for those who may move from one city toanother or change doctors.

Employees now have four years of health history and data from which theycan observe and compare year-over-year results. Physicians who get these recordsfrom the employees think it’s a wealth of current and history information andgenerally do not need to repeat the tests. Employees receive this information in anumerical format, but the information is also provided in an easy-to-understandnarrative. It is one of the best summaries of health that employees have seen, andmost employees look forward to attending the health screen every year.

Chisholm: This appears to be an informative and powerful tool.Canzona-Hindman: It is a very powerful tool. Another goal of the health

evaluation is to educate employees who may have an undiagnosed high-risk factorsuch as high blood pressure and high cholesterol, and offer them immediate adviceand counsel from medical personnel. This process allows the person to get his orher health issues into a manageable state and not escalate to a high-risk/high-cost

Another goal of thehealth evaluation is toeducate employees whomay have an undiagnosedhigh-risk factor, such as high blood pressure and high cholesterol, andoffer them immediateadvice and counsel frommedical personnel.


status. If you do not know you are at risk, then you can have serious consequences— heart disease, cancer, stroke — which costs more for treatment versus the

pro-active health screen and early interventions such as medication. Overall, thehealth screening process is less costlythan what the alternative catastrophicresults could be.

Chisholm: What a wonderfulbenefit.

Canzona-Hindman: It is a fantastic benefit!

While we were introducing ourhealth evaluations, we tried hostingdifferent nutrition programs and other awareness sessions each month,such as National Heart Month,National Breast Cancer AwarenessMonth, Lung Cancer AwarenessMonth and more. Our approach is to host and focus educational seminars,which correspond to the month’stheme, whether it is a lunch-and-learnsession, activity or an educationalemail. There are very simple thingsthat you can do to help continue to create awareness, and we focus on heart, cancer and diabetes because those affect our employees, their families and friends.Participating in “National Wear Red Day” for heart disease awareness for womenwas a huge success, and now we have “Wear Blue Day” in September for ProstateAwareness and “Wear Pink Day” in October for Breast Cancer Awareness.

Our approach to education and awareness is continuous and ongoingthroughout the year, which reinforces wellness and provides visibility and moreyear-over-year connections, where employees do not just see wellness as a one-timeevent. The more they are aware and take a proactive approach to their own health,

the better off they are going to be, andthe profits are going to be, and so on.

Chisholm: So it’s win-win foreveryone.

Canzona-Hindman: In July , we started our exercise reimbursement for employees whoexercise on a regular basis at a gym orfitness center. The reimbursement isfor monthly fees, special classes ortrainer costs. When the exercise reimbursement plan was announced,we received extremely positive feedback

Our approach to education and awarenessis continuous and ongoing throughout theyear, which reinforceswellness and providesvisibility and more year-over-year connections.


and thanks from our employees. The usage of the plan has been steady and has increased each yearsince inception.

We also conduct financial fitnesssessions. When the financial crisispeaked, you could see the anxiety on employees’ faces. We asked a vendor to come in and host a session to open up dialogue with the employees — “What are your questions? What are your concerns?”The dialogue allowed them to hearfrom an industry expert how to address and protect themselves financially now,and how to stay the course for long-term investments. It was a great way to investin our employees’ health and wellness with no cost to PCL.

Chisholm: How do you know when you reach that culture of wellness?Canzona-Hindman: It is my belief that wellness is only one part of PCL’s

dynamic culture, and I look at wellness as a journey, not a destination. It is ongoing and continuous, and feedback from employees is essential. We survey ouremployees regularly. Feedback allows you to adjust and customize your initiativesto the needs and requests of employees.

You must continually update and refresh your approach; try new and creative ways to get employees physically and mentally fit, and then pay your success forward. For example, we recently updated our Exercise ReimbursementPlan and renamed it the Wellness Reimbursement Plan. The updated plan is moreinclusive and continues to reimburse employees for exercise at gyms and fitness

centers, while reimbursing employeesfor other wellness costs, such as weightmanagement/loss membership fees,tobacco cessation costs not covered by PCL’s medical plan, and financial fitness sessions sponsored by PCLwhich have facilitator or book fees.

Chisholm: So it’s an ongoingprocess, but an extremely beneficial one.

Canzona-Hindman: The journey sofar has been worth the work and effort.

Healthier employees being proactive advocates for their overallwell-being has been a positive outcome.PCL has received three HealthyCompany awards since beginning thisjourney in late . Another benefitof having a wellness culture is it helps

You must continuallyupdate and refresh your approach; try new and creative waysto get employees physically and mentallyfit, and then pay yoursuccess forward.


you brand yourself as an employer of choice. People want to work for a companythat cares about them as a person, as well as a professional.

However, the real reward and the real impact — are changing people’s livesfor the better, and in some cases — saving lives!

Chisholm: I think that is what’s so great about this whole message — to letour readers know that they can start right away and have a positive effect on theirmost valuable assets — their people.

CONCLUSIONWorkplace wellness programs have numerous benefits, including healthier and

happier employees who are safer, more productive and loyal to their employers. By making wellness part of its culture, PCL demonstrates to its employees that itcares about their health and well-being. �

Kelley Chisholm is editor of FMI Quarterly. She may be reached at 919.785.9215 or via email [email protected].

By Cynthia Paul

A t Boston-based Nitsch Engineering, engaging all

employees in planning leads to success, even in

challenging economic times. Founded in 1989, Nitsch

Engineering works in 17 states and five countries. The firm provides

civil/site engineering, transportation engineering, land surveying,

planning and GIS services. Certified as a Women-owned Business

Enterprise (WBE), Nitsch focuses on both public and private clients.

Ninety-two percent of the firm’s civil engineers are LEED APs and

more than three-quarters of the firm’s transportation engineers are

LEED Green Associates.

FMI interviewed founding principal and chairman Judy Nitsch, PE, LEEDAP BD+C, and president/CEO Lisa Brothers, PE, LEED AP BD+C.

Cynthia: When meeting perspective customers for the first time, how do youdescribe Nitsch Engineering?

Judy: It depends on who the customers are, what they might need, and their

CONVERSATIONS WITH CYNTHIA

Each quarter Cynthia speaks with leaders in the A/E/C industry on topics that echo the theme of the issue.

Creative Engagement: Build Better Communities

90 � creative engagement: build better communities

objectives. We have many differentdisciplines. We do surveying andtransportation engineering mostlylocally. We do civil engineering locallyand around the world, so it dependson the service, the geography andwhat the client may need.

Lisa: People definitely understandthat Nitsch Engineering is a progressive firm and that we think outside the box. Ilike to tell people that we are not just your typical engineering and land-surveyingfirm, that we are truly collaborative and client-focused. People like to work withus because we are fun to work with, and our firm is good at developing goodworking relationships and maintaining them.

Cynthia: How is Nitsch Engineering different from other engineering firms?Judy: One of the things we try to do is to keep our staff engaged and happy

by leveraging the interesting things that we do, and I think we are good at that.We work at speaking at conferences, engaging our clients to be on panels with us,putting on programs that our clients need to know about, with the underlying

theme being that they become moreaware of the cool things that we do. As engineers, we are not your typicallinear-thinking engineers; we are much more collaborative. The otherday in a meeting, we were talkingabout how we are perceived more asdesigners instead of engineers in someof our disciplines and we like that. Infact, it was an “ah-ha” moment for usknowing that it really is one of our differentiators. We are at the table asdesigners with the architects, ownersand landscape architects when they areplanning the projects. Our planningand engineering groups are considereddesigners, meaning we are not justgiven something and told to engineerit — we are part of the project planning,

and that is one of the ways we are able to maintain that boutique focus of ourcompany. The past few years have seen a terrible recession, but we actually grew %in , and our was even better. So with working our strategic and marketingplans, investing in our staff, investing and knowing what is going on in the industryand the marketplace — I think all of those rolled up help inform why we aredoing as well as we are, despite what is going on in the general economy.

Lisa: Another example of how we think differently is our land surveyors’ use of laser scanning. They are finding unique and innovative ways to use laserscanning on pieces of projects for which people wouldn’t normally think to use

People like to work withus because we are fun towork with, and our firm isgood at developing goodworking relationshipsand maintaining them.

— LISA BROTHERS

Cynthia is a managing director at FMI andpractice leader for business development.She works with industry leaders to help create a strategic vision in order to position their companies to capture market share and grow profitably.


laser scanners. Our land surveyors are trying to deliver a better product to theclient using the new tools they have available. Again, we are trying to be a savvyadvocate and bring different things to the table to make our clients think differently. What we offer may be abetter solution for what they are tryingto do. Our land surveying group isdoing a great job with its laser scannertechnology in that regard.

Cynthia: What are your individualroles and responsibilities?

Lisa: I became CEO and presidenton Jan. , . My role is to developand implement strategic vision for the company and manage the overalloperations and resources of the firm to ensure we maintain our profitabilityand integrity. I also want to create anenvironment where people really wantto come to work and have challengingprojects to work on. We have manyhigh-level smart employees, and theywant a workplace that is engaging and challenging.

Judy: My title is founding principal and chairman of the board. I focus on client relations and business development. We are known as a very marketing-oriented firm and are really good at being out there with our clients,whether it’s me talking to other principals or our staff talking to their counterparts,using that zipper effect. Lisa tends to focus on the public-sector side and I on theprivate-sector side. Each of us ventures into the other areas too, but when we were developing the firm those were our two main areas of focus, and we have a

divide-and-conquer sort of attitudeabout how we go about building business for the company.

Cynthia: You talk about being“savvy advocates” for the clients. Whatdoes that mean?

Lisa: For us it’s an internal termthat we developed when we wererebranding in due to the companyname change. We realized that ourstaff acted as our customers’ “savvyadvocates” because they really take thetime to understand our clients’ needsand put forward solutions to their

We are trying to be asavvy advocate andbring different things tothe table to make ourclients think differently.What we offer may be abetter solution for whatthey are trying to do.

— LISA BROTHERS


problems that they don’t even know they have, and that differentiates us from ourcompetitors. We put everything on the table and try to educate and inform ourclients even if they are difficult conversations, because we know that it is going tobe better in the long term. We coined the term “savvy advocates” to remind ourstaff that we are always on the lookout for the client.

Cynthia: Can you give us an example?Judy: When we were rebranding and changed the company name five

years ago, we talked about what a “savvy advocate” is and really drilled home for everybody the need to understand the client objectives, not just what they are asking for. For example, an architect might call and say, “I need a topographic survey for a project.” Our surveyors would say, “Let’s talk to the owner. If they aregoing to need a property line survey, then they probably will need a title insurancesurvey as well.” Instead of just doing a topographic survey right now, we shoulddo enough now to do the property line, the title insurance and the topographicsurvey, and it will save time and money in the long run for the client.

Cynthia: Excellent. So how do you communicate with and participate in themarket and the industry?

Lisa: This goes back to the core of who we are. Since the beginning of thecompany, Judy and I have always had leadership positions within the industry,

and as she says, we have a divide-and-conquer attitude. Judy and I takedifferent public- and private-sectorclients and get involved in their industries. For instance, I was presidentof the Women’s Transportation Seminarhere in Boston and was president ofthe American Council of EngineeringCompanies (ACEC) of Massachusetts.We also encourage our staff to beinvolved in local industries in leadershippositions. Also, within my community,I was on the Conservation Committeefor nine years. I am very active in mycollege, UMass Lowell, where I am onthe Chancellor’s Advisory Board andthe College of Engineering AdvisoryBoard. We want to be “out there” as ithelps with our firm’s name recognition— it gets us in front of clients andinvolved in our industry to make surethat we know what’s happening andhave an idea what might be affectingour business. That gets drilled downthroughout all of the levels of ourcompany. We really want people to be

When we were rebranding and changedthe company name fiveyears ago, we talkedabout what a “savvyadvocate” is and really drilled home for everybody the need tounderstand the clientobjectives, not just whatthey are asking for.

— JUDY NITSCH


involved in organizations, not just be a member, but be a committee chair, be ableto move up the ranks on a board because we want to be out there — it’s important.

Judy: Our tag line is “building better communities with you.” We have manydifferent communities. As Lisa said, it’s the communities in which we live andwork; it’s the communities like outreach to introduce girls to engineering careers;but mostly it’s the community of our clients. This includes every potential clientorganization out there — from NAIOP to IFMA to CREW (Commercial RealEstate Women) Network, and like Lisa said WTS and ACEC — we have peopleinvolved. In our marketing plan thereis a champion for every organization,and we expect all project managersand above to be involved in somedegree in a client organization. We tell our staff that, as professionals, theyshould be involved in the AmericanSociety of Civil Engineers, the ITE or whatever their industry associationis, but they also need to be involved in at least one client association. Sotransportation engineers are involvedin the public works associations. I amon the national board for CREWNetwork; one of our engineers hasbeen on the programs committee forNAIOP for many years. We try to be where our clients are, which means that people have many obligations outsideof their normal workday, but it also is how we get our name and brand out there,and opportunities come our way because of those relationships.

Lisa: Metrics are important, but we have the philosophy that if you just payattention to metrics and you don’t have people doing the things that are important,but not necessarily urgent, you can’t keep moving forward. So we play that balancebetween our people’s billability and what they are doing outside the company and give them the time they need to make the commitments to the organizationsthat we want them involved in.

Judy: We give them the technical support and the administrative help. In theearly days of the company, we would encourage people to chair a committee andhold the committee meetings in our office. Other committee members wouldcome in our office and say, “Oh my goodness, you’re a lot bigger than I thought,”or “You have better equipment than we do.” They are always impressed when theycome to our office. One of our engineers chairs the Public Strategies Committeefor NEWIRE (New England Women in Real Estate.) They meet every month inour office, and we provide the space and breakfast. It’s good for us too.

Cynthia: How do you engage others in the innovation and future planning in the firm?

Judy: One of my favorite quotes is Steven Covey’s “begin with the end inmind.” To engage others in the firm, we sit down and talk about what are we trying


to accomplish and then that will inform what we actually do. In we had ayear-long celebration for our th anniversary. We asked, “What are the thingsthat we want to accomplish as part of celebrating years in business?” We saidwe want happier, more engaged employees; we want clients to know us better anduse more of our services; we want to grow the firm; and we want our name out

there for the more interesting thingsthat we do. So we had all these goalsand what we wound up doing, since itwas a recession, was we packaged it tobe a yearlong celebration.

Instead of being your typical engineers and “let’s have a cocktailparty in the office one night,” we didat least one thing, and sometimes several things, every single month. We posted the activities on our website;we engaged clients and our team. Weheld four client seminars that providedAIA learning units and ASLA creditsto those who attended. I think we hadbudgeted people for each of the fourseminars, and we had more than

at one of them. It was tremendouslysuccessful and based upon our savvy advocate concept. We focus on what theclient needs. They came and learned. One session was on land surveying; one wason green/complete streets from our transportation group; one on sustainable sitedesign for our civil group; one on stormwater master planning; and the last onewas on leadership and ownership management transitions. That was to help us too,but we were targeting the next-generation principals who make teaming decisions.That “beginning with the end in mind focus” and informing how you go aboutdoing things has been very successful for us.

Lisa: We engaged many people within the premise of the th anniversarycelebration. We ended the year with a visioning session and had a wonderfulspeaker come in and help us with that. We tend to open up our planning sessionsto a cross section of the firm so we do not have just a top-down planning session.We look for people who are going to contribute to the process. We have a plan,put the plan in place and have quarterly check-ins where everybody in the companyis invited to come. We meet in the training room over lunch and have an actionplan that supports the strategic plan that we update quarterly.

Judy: Routinely, we have half of the company attending.Lisa: Yes — half of the company shows up and we have an action plan that

supports the strategic plan of the company. We look for volunteers to take on different roles and try to stress that to be a leader you don’t have to be in a management position — you can do things as a junior engineer that are of leadership nature. It’s really encouraging to see those people come to the quarterlycheck-ins and, as Judy mentioned, that our marketing plans support our strategicplan. Within the marketing plan, there are individual goals for different people


within the company and, depending on one’s position and what he or she likes ordoesn’t like, we craft the goals to his or her strengths.

We don’t expect somebody who may write really well and have a strong technical background to be out greeting people at an evening event, so we try toplay to what each employee is passionate about so he or she feels engaged and contributes to the overall success of the company. We work hard to communicatethat — we are very transparent and have an open-book management. Our financialsare shared with the entire company, so people really know where we are and wherewe’re headed. That is the way we have run the company for years.

Judy: We have many brainstorming sessions with people — it doesn’t comejust from the top down, where Lisa and I decide we are going to do something.No, we have conversations about it to engage people so they understand what weare trying to accomplish, and they are part of how we go about doing that.

Lisa: And then we support them. We put our money where our mouth is. We know if Nitsch wants to be considered a specialist, we need to do the researchto support that effort. We are alwaystrying to think about how we can beon the leading edge of a new service or technology that supports the services we provide. We have brainstorming sessions, figure out how we can accomplish it and thenactually support that effort.

Cynthia: How do you continue to challenge and grow your own individual thinking?

Judy: One of the things that I think we do really well is helping people become better at what they do.Instead of taking the things you aremediocre at and improving them to be average, we take the things that you like to do and you are good at and become really great at them.

We do a lot of training and weencourage people to go to conferences.One of the things that we have donefor many, many, many years is we havebook clubs in the office for differentgroups. We have done Ford Harding’s“Rain Making,” I think three times.One of the favorite books is one thatLisa brought in called “The Leadership Moment.” One that resonated with merecently was “Aligning the Stars,” which is a reminder that any rainmaker needs tospend % of his or her time on star-making — you need to bring people along.We don’t just sort of sit with the status quo — we always have huge to-do lists

We know if Nitschwants to be considereda specialist, we need to do the research to support that effort. We are always trying tothink about how we canbe on the leading edgeof a new service or technology that supportsthe services we provide.

— LISA BROTHERS


and know what are we trying to do or how are we going to get there. We try toget people credentialed as well; for example, % of our civil engineers are LEEDAccredited Professionals. Three-quarters of our transportation engineers are LEED Green Associates. We encourage our people to get their professional engineerlicense or PLS. We support them financially. We try to help people become credentialed, responsible professionals. We are not one of those firms where thepresident is the only one that stamps drawings; everybody is responsible for his orher own projects.

Lisa: I love to learn and I think anybody who says he or she is not continuallylearning needs to step back and think about what that really means. For me personally, to continue to challenge and grow, I throw myself in with other leadersacross different industries. I am trying not to stay solely within our industry. I

think you get greater exposure whenyou are with different people from different industries. So I am trying todo that more in my role as presidentand CEO. One of the things I did asACEC Massachusetts president was toestablish a senior leadership round-tableconversation in which we bring togetherthe senior leaders in Massachusettsand facilitate the conversation arounda “hot topic” we want to discuss.

We share high-level information atthose meetings, which has been reallyhelpful. I also like to attend EFCG’sconference in New York, because Ilove its survey that covers all across ourindustry. Of course, ACEC is alwayssomething that’s important to go to,but within the company, we definitelyhave targeted places we send people.We have sent people to programs herein Massachusetts that ACEC puts on for developing leaders. One ofthem is called Odyssey, which focuseson becoming more self-aware of yourleadership style and emerging leadership

abilities. I personally attended the Senior Executive Institute training from ACECat a national level, which was industry-specific. I am always looking for a newchallenge and a new way to surround myself with different people and try to createthose opportunities for our staff to do the same thing.

Cynthia: How will industry firms need to change and innovate to be successfulin the future?

Lisa: Everybody knows of the huge consolidation of firms within our industry.We have been approached many times to be bought, but for right now, we like what

We try to help peoplebecome credentialed,responsible professionals.We are not one of those firms where thepresident is the only one that stamps drawings; everybody isresponsible for his orher own projects.

— JUDY NITSCH


we are doing. With the consolidation of the huge mega-firms, the midsized andregional firms need to look at their differentiators and what is going to make peoplehire them instead of the bigger, full-service firms that can provide everything underone roof, probably at a cheaper price too. So for us it’s how do we maintain ourspecialty boutique firm. We are in a new world. People may think we are going to go back to the way things were before the recession, but that is not going tohappen. We all need to rethink the future; things are never going to back to what they were. Our clients are looking for ways to do things smarter and cheaper.The firms that can help facilitate clients and help them figure out how to getfunding, how to do Private-Public Partnerships, and how to be wiser with theirfunds are the ones that are going to succeed. You can’t just approach projects andclients the same way because they have too many more and different constraintson their funding than they had in the past. It will be a challenge moving forward.How we respond to that as an industry is going to be interesting.

Cynthia: We would like to thank you for your time and sharing how Nitsch Engineering strives to be different from other engineering firms by thinkingoutside the box. �

Cynthia Paul is a managing director at FMI Corporation. She may be reached at 303.398.7206 or via email at [email protected].

E ven in these challenging economic, political and

environmental times, many corporate boards continue

to be pressured to commit resources to philanthropy and

to be “good corporate citizens” through the commitment of staff

talent, time and shareholders’ other assets, most importantly, cash.

The concept of “corporate citizenship” is still evolving. In broadest terms, it “has three interrelated dimensions: strong, sustained economic performance;rigorous compliance with fundamental accounting and legal requirements; andethical actions beyond what the law requires, which advance the reputation and long-term health of the enterprise.”1 In this latter category are commitmentsrelated to the environment and to corporate philanthropy. It is the board’sinvolvement in the firm’s philanthropy which is the focus of this third chapter in this series on the role of the board in A/E/C organizations.

THE PHILANTHROPIC IMPULSEThe impetus for philanthropy may come from the CEO, other senior

executives, employees, friends, colleagues and even strangers in the communitiesthe firm serves. Sometimes the pressure comes from the board members themselves— including both “inside” or “outside” directors.

by Louis L. Marines

Integrating PhilanthropyWith the Bottom LineMY PERSPECTIVE SERIES:REPRESENTING THE AUTHOR’SPERSONAL PERSPECTIVE

Research shows a strong linkbetween firms with active corporatesocial responsibility programs andstrong financial results.

The pressure to contribute is rationalized on the premise of serving shareholderinterests usually by:

• Building the firm’s positive brand identity and competitive position • Attracting and retaining talent • Building relationships with government officials and community leaders

to reduce regulatory and special interest group obstacles • Improving the economic conditions in the firm’s communities with the

long-term goal of enhancing the size and quality of the client base• Providing learning and leadership development opportunities for staff • Providing firms with new ideas, access to technical expertise and

opportunities for R&D collaboration through grants to universities andother organizations2

Winzler & Kelly, the Santa Rosa, Calif.-based engineering firm, decided to express its community commitment by making it the focus of its thanniversary this year. All offices across the West Coast and the Pacific Rim,including locations in Guam and Saipan, are actively giving back to theircommunities during . Every office supported Rebuilding TogetherSanta Rosa, an organization that provides home repairs and renovationsto low-income homeowners. OnInternational Coastal Cleanup Day,the Saipan office helped collect , pounds of trash from the island’s beaches, and all of Winzler &Kelly’s waterfront and island officesparticipated in beach clean-up projects.Each community served by the firmwas also invited to participate in alocal celebration. “Winzler & Kelly hasalways been a committed championfor healthy, safe and dynamic communities. Our th anniversary is a great milestone for celebrating allwe’ve accomplished and for renewingour commitment to the clients andcommunities we serve,” said PresidentIver Skavdal. “The company and our staff members support these organizationsthroughout the year with financial contributions and volunteerism. Some of usvolunteer every month at the local food bank, plant trees each spring and volunteerat local schools each fall.”

GOOD BEHAVIOR IS LINKED TO GOOD FINANCIAL RESULTSA large body of research reports a positive association among philanthropy,

broader Corporate Social Responsibility (CSR) activities and firm financial success.

100 � integrating philanthropy with the bottom line

A large body ofresearch reports a positive associationamong philanthropy,broader CorporateSocial Responsibility(CSR) activities andfirm financial success.

That is, firms with strong social performance tend to have strong financial performance. However, such research confirms only this positive association — notcausation.3 Given the number of variables involved in firm financial performance,no research has yet confirmed a direct cause and effect relationship between CSRand greater profits. This uncertainty is one major reason that boards mustpay close attention to their firm’s CSRefforts and the resources committedthereto. At the moment, the efficacy ofsuch investment for profit purposes isa matter of faith and good intentions.

FIVE CRITERIA FOR BOARDS TOCONSIDER WHEN ESTABLISHING THE FIRM’S CSR EFFORTCriterion 1 —Manifesting Values

In spite of the link between CSRand good financial performance, manyprivately held firms assert that theirCSR efforts exist for reasons beyondincreasing shareholder financial value.Those reasons usually reflect the seniorexecutives’ and their boards’ personalvalues, which are likely to include butare not limited to honesty, respect,responsibility, fairness and compassion.4 Many firms’ statements of values are specificin this regard. In addition to the ubiquitous profitability, quality/excellence, clientservice, staff development and growth (whatever metric may be used), such statements frequently speak to the above personal values and justice, tending tothe health and beauty of the planet, gratitude and generosity. Such statements are important, as they are one set of criteria for the board’s assessment of CSRopportunities, priorities and commitments.

Interdisciplinary design firm Perkins+Will values, promotes and upholds“ideas and buildings that honor the broader goals of society.” The firm supportsthese values by making extensive pro bono contributions of design work annually.“We are part of The % program of Public Architecture (www.theonepercent.org),which connects nonprofits with design firms that can help them,” explains COOBen Fisher. “In and , Perkins+Will donated more than , hours ofdesign work to nonprofit projects, and we are on a similar trajectory in . This isa commitment the firm has made in support of our stated social purpose. Thestaff finds it exciting to do this work; it resonates with their desire to ‘give back’ andwe can frequently give younger people broader project responsibility than they’dhave on a really large project,” he continues.

Criterion 2 —Manifesting the Firm’s MissionThe second criterion resides in the firm’s mission statement — why the firm

exists and for what purpose it employs assets to achieve its goals. This mission is


In spite of the linkbetween CSR and goodfinancial performance,many privately held firmsassert that their CSRefforts exist for reasonsbeyond increasing share-holder financial value.

often a direct reflection of the firm’s long-term vision and, at its best, is unique to the firm. In the A/E/C industry, most mission statements are based on a commitment to improving the quality of infrastructure so as to produce enhancedsocioeconomic benefits.

Walnut Creek-based firm Brown and Caldwell is one firm with such a commitment. “Brown & Caldwell has supported Water for People for a decade,matching employee donations and sponsoring volunteers for projects that bringsustainable water and sanitation to developing countries,” says CEO Craig

Goehring. “It’s an extension of one of our core values, ‘Act with honestyand integrity.’ Most of us are in theenvironmental business because wewant to make a difference. The factthat two and a half billion people don’thave access to any kind of sanitation issomething our board, our employeesand our clients want to change.”

Criterion 3 — Supporting the Firm’s Strategies

The third criterion for the boardto use is to assess the coherence of thevarious CSR commitments the firmmakes and their relationship to the

firm’s strategies. Will the investments support the firm’s strategies by leveragingresources to make the firm more effective and more competitive? Is there an overalltheme and structure to the commitments as opposed to a random approach? Thisis easiest to assess, of course, when the firm’s philanthropy is committed to a singleorganization or activity, e.g., Architecture for Humanity, Water for People, RotaryInternational or other service clubs, local public or private schools’ foundations,American Red Cross, etc.

Such focused commitment is rarely the reality, given the number of influencesand demands upon the firm’s philanthropy, but the benefits can be significant.CDM and CHM Hill are described in an Engineering News-Record report thatspeaks of their support for Water for People: “These companies are going beyondthe corporate check writing routine and rallying support for a charity whose missionresonates with their water-engineering communities.”5

Criterion 4 — Assessing the OptionsThe fourth criterion resides in the decision-making process itself. Most boards

will decide that actual decisions about the firm’s philanthropy are the responsibilityof the CEO. The board’s function is often limited to that of review, usually againstthe criteria listed above. What the board will want to know is:

• How is the size of the pool of available resources decided? • How is the pool allocated between cash contributions and those of staff

time and talent?


• What is the program for involving employees’ time and talent and goodwill? [For a useful basic primer, see “How to Match Companies andCauses,” The New York Times, //.]

• How are alternative beneficiaries identified and considered? • Does the firm use one of the excellent charity evaluation websites, such as

Guidestar [guidestar.org] or Charity Navigator [charitynavigator.org], toassess the organizations it considers supporting?

• How are priorities defined and the resource pool allocated?• How does the firm assess the effectiveness of its donations, both in

contributing to the mission of the receiving organization and in supportingthe goals of the firm itself?

Criterion 5 — Communication PlanThe last bullet point above raises the board’s fifth criterion: What is the firm’s

communication plan to ensure that those it wants to impress with its philanthropy— clients, community and government leaders — know what the firm is doing?As a valuable by-product, such communication efforts will create a culture of giving — both within and outside the firm, says Princeton ethicist Peter Singer.

“We tend to do what others in our ‘reference group’ — those with whom weidentify — are doing. And studiesshow that the amount people give to charity is related to how much they believe others are giving. Weshould encourage those who give, by our example,” Singer says, “to bemore open about the size of theirdonations.”6 While such publicity may conflict with the self-effacingmodesty of many A/E/C professionals,it is essential in order to reap therewards expected from investing shareholder assets.

The board should also addressissues such as to what extent does the firm encourage and monitor individual pro bono efforts by thefirm’s principals and staff? The boardshould look at what leverage may begained without additional cost to thefirm and to ensure the firm’s goals, values and mission are enhanced andnot compromised. Both the board and the firm’s staff need to recognize that individual activities will, even with full disclosure about the difference betweenfirm and individual authorization, reflect on the firm. Awareness of these activitiesand a well-circulated policy about staff responsibilities and behavior when doingindividual charitable work will help to ensure that any public recognition that tiesback to the firm remains positive.


What is the firm’s communication plan toensure that those itwants to impress with its philanthropy —clients, community and government leaders— know what the firm is doing?


The board must also evaluate how to assess the “opportunity cost” of lost time and talent when a principal or staff member’s altruistic interests require alarger time commitment than he or she can make on nights, weekends and paidtime off. Some organizations provide opportunities for work that involve foreign travel, such as the Transformational Business Network [tbnetwork.org], whichhelps match up corporations with nongovernmental organizations (NGOs) toaccomplish poverty-alleviation projects in developing regions. How does the firmdecide if that is a solely personal commitment and expense, even when theemployee or principal is not paid for such time?

Beyond Perkins+Will’s participation in The %, its employees extend contributions to their own colleagues who are helping others. Fisher offers theexample of one of the firm’s associate principals, who moved with his family toUganda for three years. “His wife is a doctor and is now teaching at the Uganda

Christian University, and he is settingup the university’s architectural program. Their work is entirely probono, and they are living on donations.Many of our staff members havedonated to their support.”

Fisher himself uses his vacationtime to take high school studentson spring break to Mexico, where theybuild houses every year.

THE MOST IMPORTANT CONCERN REMAINS: FIDUCIARY RESPONSIBILITY

Finally, the most important boardconcern will continue to be whetherdirectors are fulfilling their fiduciaryresponsibility in authorizing or allowing,by their consent or silence, the use ofshareholder resources for activities thatmay at best have a tenuous connectionto profits. The idea that corporate philanthropy should be win-win “is avery appealing proposition ... but it’s anillusion, and a potentially dangerousone,” wrote Aneel Karnani, a business

professor at the University of Michigan, in a recent Wall Street Journal editorial.“In most cases doing what is best for society means sacrificing profits. This is truefor most of society’s most pervasive problems; if it weren’t, those problems wouldhave been solved long ago by companies seeking to maximize their profits.”7

Nestlé Company puts its philanthropic efforts to work in ways that will giveit direct benefits, by helping the farmers who supply it reduced water use anddevelop products with higher nutritional value. Chairman Peter Brabeck-Letmathesaid, “I am personally very much against corporate philanthropy. You shouldn’t do

The board must alsoevaluate how to assessthe “opportunity cost”of lost time and talentwhen a principal or staff member’s altruisticinterests require a larger time commitmentthan he or she can makeon nights, weekends and paid time off.


good with money that doesn’t belongto you. What you do with your ownmoney, this is absolutely fine.”8

Debating this assertion is wherethe real work of boards relative to CSR must begin. Early on, boards mustdefine their own criteria for deciding if their firm has a CSR program, what resources it employs, and how its effectiveness is measured. Directors maybe tempted to make generalizations anddraw conclusions based on anecdoterather than evidence. That temptationmust be resisted.

As the Harvard Law SchoolForum report concludes, “Officers and

directors can no longer treat charitable giving as a peripheral activity or an after-the-fact distribution of profits ... It is no longer sufficient for corporate philanthropy tosimply ‘do good.’ If corporate giving is to succeed in the long run, it must providea financial return. Acknowledging corporate philanthropy’s economic benefits doesnot negate its power to alleviate social problems and enhance communities.” �

Louis L. Marines, Hon. AIA, is the founder of the Advanced Management Institute for Architecture andEngineering, now the A/E Services Division of FMI Corporation. He consults with professional design firms

across North America and is an active author and speaker. His book “The Language of Leadership,” was

published in 2010 by Greenway Communications. Marines is a CEO Emeritus of the American Institute of

Architects in Washington, D.C. He can be contacted at [email protected].

1 Heineman, Ben W. Jr. “Are You a Good Corporate Citizen?.” Wall Street Journal, June , .2 Lev, Baruch, Christine Petrovits, and Suresh Radhakrishnan. The Harvard Law School Forum on Corporate Governance and

Financial Regulation, “Making the Business Case for Corporate Philanthropy.” August , . http://blogs.law.harvard.edu/

corpgov////making-the-business-case-for-corporate-philanthropy/3 Ibid.4 Kidder, Rushworth M. Moral Courage: Taking Action When Your Values are Put to the Test. Harper Collins, .5 Koo, Annie. “ENR Next: Firms Think Outside the Donation Box.” Engineering News-Record, August , .

http://enr.construction.com/people/ENRNext/archives/.asp6 Singer, Peter. The Life You Can Save: Acting Now to End World Poverty. Random House, .7 Karnani, Aneel. “The Case Against Corporate Social Responsibility.” The Wall Street Journal. August , .

http://online.wsj.com/article/SB.html 8 Kucera, Joshua. “Bottom Line on Corporate Giving.” U.S. News and World Report, November , –.

P ompeii. Simply reading that name ignites the

imagination and causes us to conjure up images of what

might have happened in 79 A.D. And, for those lucky

enough to visit the ruined city on a day when it is not overfilled with

too many tourists, it is possible to gently squint your eyes and look

down the narrow streets or into the courtyard of a private home and

imagine a vital, bustling town, filled with vendors, merchants and

artists plying their trades, with families at dinner and children at play.

One can have that same experience, an almost tangible sensation of sharingthe past, of occupying the same spaces as some of our ancestors, walking throughthe well-preserved ruins of Ostia Antica, once the ancient port city for Rome.Both Pompeii and Ostia offer vivid, unmistakable reminders of the Romans’ creative energy and their commitment to infuse art into and throughout theirpublic and personal lives.

One beautiful confirmation ofthat commitment is the remarkablejuxtaposition of Ostia’s main theatre,located directly in front of a vast

By N. Alexander Miller III

Art Is Hope: Binding thePast to the Present

Art, beautifully and miraculously,has the ability to erase boundariesof space and time and replacethem with a shared geography of the soul.

“A work of art is above all an adventure of the mind.”

—Ionesco

108 � art is hope: binding the past to the present

square whose center is occupied by theruins of a temple to Ceres, the Romangoddess of grain and agriculture. Andyou guessed correctly, the name of thegoddess provides the etymological rootof the word “cereal.”

“Ceres + grain = cereal. Art andagriculture on the same public square.”One can imagine the conversations ofthe architects and city leaders as theydebated the site for the theatre, theirultimate decision perhaps rooted in an innate understanding of the powerand, yes, the drama of the setting they selected. Almost , years later,the aptness of that choice is readilyapparent. Seated in the stone risers ofthe half-moon theatre, today one can

watch performances and hear concerts viewed against the backdrop of the templeto Ceres. To hear Italian arias floating from the stage framed by the columnedruins in the background, will make your heart soar. The setting provides a visibleand visceral affirmation of Willa Cather’s comment, “Religion and art spring fromthe same root and are close kin.”

The German theologian Friedrich Busch puts it even more precisely. “Goodart is a form of prayer. It is a way to say what is not sayable.” Where does it comefrom, our human instinct and need to create, to express through art that whichmight otherwise be inexpressible? When did the need emerge? In the spring

of , I read a fascinating article in the New York Times. It described the extraordinary response that archaeologists and anthropologists hadin the mid-th century when theyuncovered the graves of Neanderthals

and found that they had been buried with flowers … big red flowers. What was their purpose? What was their intent? We may never know what they were trying to express, but American scholar Thomas Cahill suggests that their actions represent one of those transforming moments when earlier species began tobecome more fully human, when they began to express themselves through language and symbols.

While they may not have formulated the concepts, I suspect that thoseNeanderthals stumbled into something essential about the nature of art: That art not only reflects an increased self-awareness, but also that the very act of experiencing art creates a more meaningful sense of self and a deeper awareness of the physical world around us … and the emotional worlds within us. To me,those big red flowers suggest that our evolutionary relatives had an appreciationfor beauty and a longing to preserve some element of that beauty for as long asthey possibly could, even into a future that was totally unknowable to them.

Where does it comefrom, our human instinctand need to create, toexpress through art thatwhich might otherwisebe inexpressible? Whendid the need emerge?

Ceres + grain = cereal. Art and agricultureon the same public square.


In fact, one of the wonderful powers of art is its ability to transcend boundariesand to link generations deeply and meaningfully, binding the past to the presentin ways that are frequently unpredictable. Most of the choral students at N.C.State University who sing a Renaissance motet or a th-century chanson havenever visited a European cathedral or walked through the countryside of France.When N.C. State’s University Theatre students perform “Amadeus” and “Macbeth,”they have no personal experience of th-century Vienna or of Shakespeare’sEngland. When the crafts students learn to use their hands to throw a pot or turna bowl, most of them have no memory of great-grandparents who may well havedone the same. But through art, those connections do exist. In ways that are

often imperceptible and occasionallymysterious, we brush up against the cultural heritage of those whocame before us and we are enrichedand enlarged. And when we fullyembrace and explore those experiences,sometimes we are transformed.

Art, beautifully and miraculously,has the ability to erase boundaries ofspace and time and replace them witha shared geography of the soul. AsMarcel Proust wrote, “Thanks to art,instead of seeing a single world, ourown, we see it multiply until we havebefore us as many worlds as there areoriginal artists.” Today we understandthe significant importance of the artsin the lives of our families and our

Art, beautifully andmiraculously, has the ability to erase boundaries of space and time and replacethem with a sharedgeography of the soul.

110 � art is hope: binding the past to the present

communities. We know that the arts speak to our deepest and most ancient longings: To understand who we are and why we are … and to explore and wrestle with those questions, both privately and publicly. Art is about hope. It isabout joy and celebration. It is about preserving those things that are beautifuland meaningful into a future that we cannot predict, but whose dimensions wecan help to shape.

Generations of students at N.C. State and universities around the country knowthat their involvement in theatre, music, dance and the visual arts has deepenedtheir self-awareness, prepared them to take risks and allowed (no, required!) themto think and act creatively. Through their engagement in the arts, they have foundthat their personal, social and professional frames of reference have expanded dramatically, frequently in unconventional and unexpected ways, allowing them to

envision possibilities and connectionsthat otherwise might simply have been overlooked or unimagined. Theyhave experienced the truth of ThomasMerton’s wonderful observation that,“Art enables us to find ourselves andlose ourselves at the same time.”

Whether walking along the stonecobbled streets of Ostia Antica, whereat every turn you encounter vivid

reminders of the artistry and craftsmanship of its citizens, or attending an arts performance or exhibition in your own hometown, we are all elevated andenriched by those architects, builders and creators who understand that “art isabove all an adventure of the mind.” �

N. Alexander Miller III is associate vice chancellor, ARTS N.C. State, and may be reached via email [email protected].

By two millennia, the builders in Ostia

anticipated John Ruskin’s aphorism

that “All architecture proposes an effect

on the human mind, not merely a service

to the human frame.”—John Ruskin


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