Deltek Clarity A&E Industry Study: Understanding Key Characteristics of High-Performing Firms

Bench players don’t become part of the starting line-up overnight. In many cases, they first decided that being good just wasn’t good enough and put in the necessary work to achieve a drastic change.

The A&E industry is no different. There are truly great firms; many have been recognized within the industry as best places to work, top design firms or even top emerging firms. But their status often reflects a choice to pursue greatness, followed by introspection and hard work.

What separates these firms from everyone else? In this year’s Deltek Clarity A&E Industry Study, we broke out a group of high performers – more than 25% of participants – to analyze what makes them so successful.

Let’s take a look at some key areas where the high-performing firms stand out from the competition.

Net Labor Multiplier and Operating Profit

We started by examining two important metrics: Net Labor Multiplier and Operating Profit.

Net Labor Multiplier is a measure of how many dollars you bring in per each dollar spent on direct labor. High-performing firms have a net labor multiplier above 3.0. In fact, the average for high-performing firms this year is 3.34, compared to 2.86 for all other firms, showing that they are exceeding even the minimum requirement of 3.0 to be a high performer.

High performers also far outpaced all other firms in operating profit, with nearly three times the profitability: 25.9% for high performers compared to 9.3% for all other firms.

Not a high performer yet? Your firm can achieve a better net labor multiplier and higher operating profits too. Start by examining your firm with questions like:

• What challenges are holding you back?
• What can you do to incrementally move the numbers?
• What are your numbers now and what are achievable goals for the next year?

Winning the Talent War

High-performing firms are doing more than successfully managing their bottom line. They also are keeping their top performers and recruiting new all-stars. On average, high-performing firms reported a 10% increase in staff, compared to just 3.1% for other firms.

They also have a lower employee turnover rate at 11.6% compared to 14.3% for other firms. These numbers indicate that personnel aren’t merely moving from company to company, but that these firms are truly growing and expanding their businesses.

The war on talent is heating up. As the economy continues to recover, employees are more confident and see more opportunities to make a job change in the growing market. Firms are being challenged to compete for qualified staff and find creative ways to keep their exceptional talent right where they are.

If your firm is having difficulty attracting new talent or retaining top performers, start by examining what you bring to the table as an employer. Some useful questions include:

• What makes your firm different? Why do your employees like working there? Ask them.
• Why are people leaving your firm? Where do you need to focus your attention? Do you conduct exit interviews?
• What is attractive about your company to a potential employee? Why would they take a leap of faith?

Project Management Maturity

Successful project management is key to an A&E firm’s success. So how do industry leaders rate the maturity of their firms’ project management discipline? High-performing firms were three times as likely to say their project management discipline was very mature.

In organizations with mature project management capabilities, firms have more systematic approaches to managing scope, schedules, resources, costs, risk, quality and communication. It’s no surprise that high-performing firms are confident in their project management capabilities. This can be the reason they have stronger financials and lower turnover rates.

At high-performing firms, teams work together in a more streamlined approach and staff may have a better understanding of expectations. To improve project management, start by examining your firm’s strengths and weaknesses with questions such as:

• What do your project managers do well?
• What is missing?
• What are the biggest challenges that your design teams face?

Room For Improvement, Even For High Performers

Although there are many areas where high performers excel, there is still room for improvement. There are even a few areas where the “great” may be able to take some lessons from the “good.” These include:

• The average collection period for high performers is six days slower than all other firms and 15 days slower when compared to large firms.
• High performers are also less likely to have a go/no go process, which can cost them significant time and money if they chase the wrong opportunities.

To learn more about high performers and how your firm measures up, visit the 36^th Annual Deltek Clarity A&E Industry Study.

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