As a design and construction professional you know that a building is only as strong as its foundation. Without a strong foundation, a building will move and settle over time and have lots of problems.
The same principles apply to your business. Processes and systems are your business foundation. They are essential to guide employees to deliver great projects and ensure quality and consistent results. The better your business foundation, the more predictable your employees’ performance and behavior will be.
A good process is the “best way to do something.” If you can get your employees to agree that they should do things the best way possible, you can start to move them towards acceptance of following best practices. Change is never easy, but when you get employee buy-in and concurrence for the “why” behind the process, they are much more likely to comply.
How Do Processes Turn to Profits?
Having predictable best practices and consistent employee behaviors will enable you to grow faster and deliver consistent results – even when a valued employee leaves. It will also enable new employees to get up to speed faster and ensure clients have a great experience regardless of the office or team they are working with.
Fast growth often erodes profit margins and cash flow. From the moment you hire a new person to when you start to receive cash from their billable work can be 90 to 180 days. Effective processes, systems and training can dramatically reduce the time it takes to see a Return on Investment (ROI) from a new hire.
Is There a Disconnect With Your Employees?
Many A&E leaders believe their processes are better than they are. In assessing over 3,000 A&E firm employees over the last five years, the data shows that 60% feel that their firm’s processes are either non-existent, don’t work or are not being followed.
In fact, when we segregate the results of our Business Management Assessment survey, we see that executives usually score the processes much higher than employees. The level of “I Don’t Know” scores also skyrockets the lower the experience level of the employee. These data points call out the need for much more in-depth training as well as more focus on establishing well-documented business processes that all employees are required to follow.
The primary reason for the disconnect between the leaders and their staff is fast growth and turnover. Many leaders believe they have addressed the issues in their firms and created documented processes. But as new employees join and experienced employees leave, they lack consistent training and accountability to follow them.
The majority of leaders agonize over the fact that expensive ERP systems are not being utilized effectively. Employees need consistent training and oversight to ensure that using the system is a habit. Frequent monitoring of employee usage of systems is often required to ensure new modules such as Resource Planning or CRM are adopted and used properly.
How to Know if You have a Strong Foundation
To get an objective assessment of your firm’s processes and systems, and your employees’ familiarity and compliance with them, you need to dig deep into what is going on every day. Employee feedback can be very valuable for understanding where processes are confusing or non-existent.
If a process is not documented, it does not exist! If your employees don’t understand a process, if it hasn’t been updated in years or they don’t know where to find it, then it might as well not exist.
Start by making a list of all processes that you already have in all the key areas of your business – Accounting, HR, Timesheets and Expenses, Billing and Collections, Marketing and Sales / Proposals, Estimating, Project Management, Resource Scheduling and Client Service.
Look for gaps where employees might be guessing, doing things their own way or using spreadsheets to compensate for inadequate reporting.
“If a process is not documented,
it does not exist!”
Turning Processes to Profits
To see the benefits of developing effective business processes it is critical that employees accept why they are important, understand them and have consequences for not following them.
The single biggest reason for problems on projects is lack of training, consistency and accountability. It is impossible to ensure great quality, safety and high profits without sound business processes and systems. As a leader, your biggest challenge is to get your employees to understand, accept and behave the best way possible.
Very often your employees don’t have the 30,000 foot view of the company and see your business processes as a nuisance, or worse, a hindrance to their work. Foundational business training can teach them the “why” behind your processes and help them understand how the firm makes a living. This will also get them to embrace change easier and even contribute to improving the efficiencies of their work.
Processes can be turned to high profits by ensuring that employees have well thought out documented guidelines for performing their work every day. Rather than leave great performance to chance, you can ensure they are given the roadmap to success on every proposal and project.
Cash is King Webinar
Managing Cash Flow in a Down Economy
Date: Wednesday, August 19th, 12:00pm ET
The average days to collect cash in the AEC industry is between 60 to 120 days. In this web training we will examine the complete project lifecycle to understand how cash flow can be increased when the economy is uncertain. Participants will gain valuable tips to improve cash flow by improving timesheet practices, reducing the billing cycle, and improving client relationships and collection practices.
More From the Find the Lost Dollars Blog...
I often hear people say that they are hoping we get back to normal. It feels like there is no normal anymore. Everything we used to take for granted has changed. Simple things like sitting at a restaurant and being served the food of your choice are now exciting, and...
The thing we all have in common right now is that it is difficult to predict the future. In my Monday AEC Crisis Roundtable meetings, the number one concern of A&E leaders right now is uncertainty. Without certainty it is challenging to develop strategy or plan...
Since this COVID-19 crisis started in March, I have been meeting with about 50 A&E leaders every Monday to discuss the new challenges they are facing in their businesses. I am thrilled at the level of participation, sharing and collaboration taking place in this...