Chairman and CEO of Mabbett & Associates, Inc. (Bedford, MA), a verified Service-Disabled Veteran-Owned Small Business.
By Liisa Andreassen
As chairman and CEO, Mabbett has direct responsibility for overall company management, strategic planning, financial and general administration. The company, due to Mabbett’s 19 years of meritorious service as a Major, Environmental Sciences Officer in the U.S. Army both on active duty and in the Army Reserves, is a U.S. Department of Veterans Affairs, Center for Verification and Evaluation, verified Service-Disabled Veteran-Owned Small Business.
“One must ensure there is a competent senior management team in place to carry on the business when you’re gone,” Mabbett says. “I have such a team.”
A conversation with Arthur Mabbett.
The Zweig Letter: How far into the future are you able to reliably predict your workload and cashflow?
Arthur Mabbett: We’ve significantly grown the firm over the past five years and have invested in our accounting software platform and staff to better predict financial performance, including cashflow. We have also won many multi-year IDIQ contracts that have allowed us to establish a solid base of authorized work year-on-year. Now, we’re able to predict workload and cashflow for at least a year out and in some cases, if no changes in contract terms and conditions occur, many years out. We are leveraging these factors and tools to help shape our business strategy for our five-year strategic business plan.
TZL: What role does your family play in your career? Are work and family separate, or is there overlap?
AM: My family has played a very important role in my career. There is a definite overlap. As a serial entrepreneur, they have supported me on a continuing and consistent basis. Without their understanding and support, I would not have achieved the success we’ve earned over the past 39 years. My wife, in particular, has been a most trusted confidant and supporter. My children are all married and have families of their own, but they realize the level of sacrifice required to establish and grow a successful business. I’m also fortunate to have a son who has pursued a career in environmental science and engineering and currently plays a key role as the firm’s vice president of operations. Finding the appropriate work-life balance is always a challenge, but with the support of others, balance is achievable.
TZL: What, if anything, are you doing to protect your firm from a potential economic slowdown in the future?
AM: We have a great mix of repeat clients and services. Our “eggs” are not in one basket, which helps minimize the impact of a downturn in a specific sector or the economy as a whole. Also, we have become a leading small business federal prime contractor. Many of our federal contracts are typically five-year IDIQ programs that afford us with excellent workload stability. Our long-term return on investment philosophy, picking and choosing our clients carefully, and maintaining an 80 percent or greater repeat client base have allowed us to successfully weather any economic slowdown realized over the past 39 years. We started the firm when interest rates were 22 percent!
TZL: Are you using the R&D tax credit? If so, how is it working for your firm? If not, why not?
AM: We engaged a CPA firm four years ago to research the R&D tax credit. We qualified and have received a tax credit over the past four tax years. It’s refreshing to see our business receive federal tax credit support as we need to constantly invest in our staff, find new ways to be innovative to succeed, and provide our clients with enhanced value-added professional services.
TZL: It is often said that people leave managers, not companies. What are you doing to ensure that your line leadership are great people managers?
AM: We have a Project Manager Training Program that runs approximately 18 months. The program is designed to help our future leaders obtain the skills not typically taught to engineers and scientists during their college years. Modules include communications, leadership, and client relations. We also require all supervisors to receive training on what it means to be a supervisor and how to be successful in personnel management. We believe and hope that our project management training both enhances retention of our future leaders and allows them to better mentor and guide their direct reports.
TZL: How are you balancing investment in the next generation – which is at an all-time high – with rewards for tenured staff? This has always been a challenge but seems heightened as investments in development have increased.
AM: I am a traditionalist in that I believe hard work is required to succeed. One needs education, experience, and persistence to realize an enhanced level of professional service and success. The next generation must be provided with the learning opportunities and experiences necessary for their personal growth and development, just like prior generations. However, in some cases they must be provided with such experiences sooner in their careers; they’re not necessarily as patient as our more mature tenured staff. The level of mentoring is greater and it’s more important for them to achieve a goal that has a positive impact on life and society in general. However, the next generation must also realize that personal commitment, time, and effort are required to achieve these objectives. For many, this is a surprise when they enter the work environment. There is some feeling of entitlement which must be addressed early on so the next generation can (hopefully) appreciate the realities of the “real business world” and our profession in order to succeed.
One must still reward tenured staff in a myriad of ways, tailored primarily to their needs. A young single professional has different needs than a married, seasoned professional with a mortgage, children, and college pending, etc. Benefit programs should be comprehensive and flexible to the extent possible. Performance bonus programs and IRA and profit sharing-retirement plans should be part of the mix.
TZL: What novel approaches are you bringing to recruitment, and how are your brand and differentiators performing in the talent wars?
AM: I wish we could point to a novel approach to win the talent war. As an SDVOSB, we work to connect with veterans who bring our team experience, commitment, and experience in the federal government. Our growth has also allowed us to hire more “seasoned-credentialed” part-time staff who are seeking 500-1,000 hours of work per year. The part-time staff have delivered high-value skill sets with flexibility and competitive rates. We have also stepped up our efforts to bring on college interns to help create a pipeline for our future generation of staff.
TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid?
AM: As an SDVOSB I have to remain active in the day-to-day operations of the business to maintain this federal small business designation. If I retire or I’m deemed by the federal government to not meet its requirements, the business loses its SDVOSB status. If this were to occur, we’d have to compete as any other small business in a “full and open” market. Approximately 50 percent of our current federal workload is as a small business, not an SDVOSB. As such, our long-range plan will be to seek non-SDVOSB opportunities in the federal-public sector and also continue to grow our private sector workload. I have no plans to retire anytime soon, and if I were to die on the job, the firm would have a three-year transition period per federal law to restructure and also to continue to actively compete for Veterans Administration work which represent the majority of our SDVOSB contracts. One must ensure there is a competent senior management team in place to carry on the business when you’re gone. I have such a team.
TZL: What unique or innovative pricing strategies have you developed, or are you developing, to combat the commoditization of engineering services?
AM: Simply put, we no longer pursue low-price technically acceptable procurements. We have focused on pursuing best-value and Brooks Act A/E opportunities where qualifications drive the selection process. In the private sector, we look for and retain clients whose decision making is not based strictly on “low price.” We don’t want to achieve growth for the sake of growth alone. We’d rather have less growth with increased profitability. We don’t want to work harder for less.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
AM: One must trust, but verify. I inherently trust others to do what they’ve been delegated to do, but I also realize that one must verify that what’s been delegated has been successfully and properly completed. Oversight is an essential element of effective management and as such, senior management and PMs must verify on a regular basis that an individual’s as well as a system’s performance is acceptable and that serious issues haven’t occurred. If problems are identified, immediate steps must be taken to resolve them, and enhanced training may be required to help ensure they do not reoccur.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
AM: Our firm has always encouraged and supported diversity and inclusion. We are an equal opportunity and veteran-friendly employer. We have an agreement with the US Department of Defense to support the guard and reserve. We currently have a diverse staff by gender, race, sexual orientation, religion, country of origin, and ethnicity, etc. We actively consider the above factors and seek qualified individuals as part of our recruitment programs.