CEO & president of Bennett & Pless (Best Firm #11 Structural for 2018), a 50-person firm based in Atlanta, GA.
By Liisa Andreassen
“ROI for investment in our business is far higher than any other investment vehicles typically available to our potential principals,” says Gazzola. “We have set up an associate program to get them used to the idea that they need to be a top performer, have an impact, and be willing to invest and receive ROI based on the performance of the business.”
A CONVERSATION WITH EDWARD GAZZOLA.
The Zweig Letter: When did you have the most fun running your firm, and what were the hallmarks of that time in your professional life?
Edward Gazzola: Now and in my first year. I was fortunate to be able to transition the ownership of this prominent 50-year-old business five years ago. There were 10 staff members, two offices, one market, and two clients totaling 50 percent of revenue. The economy was still soft at the time. Currently, we have 50 staff, five offices, multiple markets, and no client that is responsible for more than 10 percent of revenue. We have given raises and bonuses every year. Currently, we have a very strong management team that can run the business without me, so I have the freedom to be strategic and focus on the areas having the most impact on the success of the business. I liked year one because I was able to set the strategic direction and have quick success. It was like a fast-growing startup with a 50-year history – that was fun. But it’s been great currently as we look to have another record year but without my being involved in the day to day running of the business.
TZL: Do you tie compensation to performance for your top leaders?
EG: Yes – our top leaders each have a bonus based on the performance of their business unit.
TZL: Do you share base salary or bonus amounts with your entire staff?
EG: No – they are aware of ranges, but not specifics. However, our business leaders are.
TZL: What actions do you take to address a geographic office or specific discipline in the event of non-performance?
EG: We confront issues head on. We have a conversation and set actions for the individual and their manager to address the non-performance issue. If it persists we repeat and prepare an action plan. If it persists again, we arrange for them to leave the firm.
TZL: Have you ever closed an under-performing office? If so, tell us about it.
EG: No, we’ve been fortunate in that regard. We have however terminated clients who have not aligned with our culture.
TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?
EG: Principals are chosen based on impact on the business. This could be revenue generated or produced, but there are other factors also. As long as the person is a top-performing employee and has a big impact on the business, he/she can be eligible to be a principal – no matter their age. While we don’t currently have anyone in their 20s, we do have an associate in their 30s.
TZL: Internal transition is expensive. How do you “sell” this investment opportunity to your next generation of principals? How do you prepare them for the next step?
EG: ROI for investment in our business is far higher than any other investment vehicles typically available to our potential principals. We have set up an associate program to get them used to the idea that they need to be a top performer, have an impact, and be willing to invest and receive ROI based on the performance of the business, that is independent of their role as an employee.
TZL: How do you promote young and new leaders as the firm grows?
EG: Primarily, we give them small incremental increases in responsibility. We ask them to lead task forces and take on special corporate activities. They attend conferences and seminars on leadership. Right now, we’re focused on internal promotions and not really looking externally for leaders.
TZL: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours?
EG: Five years ago we shifted from time based to fixed fee. Now, we segregate pricing from budget when we submit proposals and the pricing is based on value to our client, not what it costs for us to do the work.
TZL: If the worker shortage continues, do you see wages increasing to encourage more talent to enter the AEC space, or will technology be used to counter the reduced work force?
EG: Both. We’re hoping to increase salaries. We’ve done a poor job as an industry of providing proper compensation for the value we deliver relative to other professional services firms. We need to elevate the value of our services so we can elevate wages. Technology will continue to reduce our efforts, however those savings should not be passed on to our clients and should be used as a means to increase wages/profitability for our profession.
TZL: Engineers love being engineers, but what are you doing to instill a business culture in your firm?
EG: We’re open about the firm’s financial performance and the key metrics that drive our business; they’re shared and discussed with everyone. We also share information on top clients from a volume as well as from a profitability perspective. At the project level, we create heightened awareness of budget and business impact. At the proposal and “add service” level, we use it as an opportunity to explain the need to price appropriately and highlight its impact on business. At the manager level, we’ve created personal P&L statements, so it’s like they’re running their own small business within a business. This also serves to enhance their financial savvy.
TZL: The seller-doer model is very successful, but with growth you need to adapt to new models. What is your program?
EG: We have some seller-doers, but mainly rely on dedicated BD staff who are not engineers, but skilled at sales. Clients like to meet the CEO; I’m active. We provide some coaching to our PMs to allow them to be effective at enhancing existing relationships. We’ve also developed account plans for our top 15 clients and have categorized our clients into appropriate categories so our effort is properly allocated.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
EG: We have annual career development sessions that are tailored to each individual’s long-term career objectives and then have actionable plans to advance them toward those career goals. (We’ve only had one employee voluntarily leave in five years.) The two key retention vehicles are:
- Monthly learning sessions where our senior engineers share their knowledge.
- A head of ‘Team Experience’ who is focused on ensuring our team members enjoy their experience here.
TZL: How are the tariffs impacting your business and that of your clients?
EG: They do not appear to be impacting our business. That said, we had a manufacturer we work for that sources their steel from China and they said they’re looking to leave the U.S. and sell into Canada and South America. We suspect that we’ll see an uptick in business from other clients who source locally so expect it will have a neutral impact on us.
TZL: How are the tax cuts impacting your business? Have salaries and bonuses increased?
EG: The tax cuts will be positive. We have not adjusted salaries and bonuses as a result of tax cuts as of yet, but expect to as they have impact. We all also benefit at the personal tax level. We share profits with staff, shareholders, and retain earnings as needed to ensure the business is successful in the long-term, so as profits increase it is shared amongst these categories.