Founder and president of Gunda Corporation (#32 Hot Firm for 2017), a 60-person engineering consulting firm based in Houston.
By Liisa Andreassen
“I’m not a big fan of utilization rates,” Gunda says. “I believe teams do better when you reward them by their accomplishments rather than utilization rates. I think this practice encourages more learning, more bonding, and more efficient time management.”
A CONVERSATION WITH RAMESH GUNDA.
The Zweig Letter: The talent war in the A/E industry is here. What steps do you take to create the leadership pipeline needed to retain your top people and not lose them to other firms?
Ramesh Gunda: Employee retention and leadership development are an integral part of our strategic plan. We revisit the plan on an annual basis to re-examine needs and action items. To develop staff into the leaders of tomorrow, it’s essential that we provide training and mentorship from the leaders of today. It was with this ambition in mind that we hired a COO, director of client services, and human resources/organizational development manager, who are not only veterans in the industry, but also have a passion for watching employees grow their skills. As you can imagine, creating a leadership pipeline and maintaining a high level of employee satisfaction is a marathon, not a sprint, and we’re happy with the results so far.
TZL: As you look for talent, what position do you most need to fill in the coming year and why?
RG: While we’re looking for good people at all levels, mid-level engineer positions seem to be the most difficult to fill right now. We’re diversifying our firm in terms of services and need experienced engineers to allow us to better compete with firms that are already established in these new disciplines.
TZL: While plenty of firms have an ownership transition plan in place, many do not. What’s your advice for firms that have not taken steps to identify and empower the next generation of owners?
RG: I once heard from a veteran in the field that you only have three options for ownership transition:
- Transition ownership internally
- Sell the firm to an outsider
- Close shop if you didn’t plan for either of the first two options
Unless you’re comfortable with the third option, it’s crucial to have a strategic/ownership transition plan in place, even for firms that are young or small. The plan will help your team understand where the firm is going and what opportunities are available to them.
TZL: Monthly happy hours and dog friendly offices. What do today’s CEOs need to know about today’s workforce?
RG: Workforce motivations evolve with each generation. While it took 20 to 30 years for a generational change in the late 1900s, you now see a generational shift in what feels like every five years. The most important thing that a CEO can do is to keep an open mind because with up to five generations working alongside each other, flexibility is key. I like to take a big picture approach to employee satisfaction and leave the particulars of how to keep people happy and drive performance to team managers (with HR support). Managers are in the trenches with their team and have a better pulse on what motivates their team members.
TZL: Zweig Group research shows there has been a shift in business development strategies. More and more, technical staff, not marketing staff, are responsible for BD. What’s the BD formula in your firm?
RG: Our formula matches with Zweig Group research. We believe every team member has a responsibility for business development. We really don’t have a traditional marketing team; we have a business development group which focuses on long-term growth strategies and supporting our engineers’ business development efforts.
TZL: Diversifying the portfolio is never a bad thing. What are the most recent steps you’ve taken to broaden your revenue streams?
RG: Our diversification efforts include adding new services, attaining new clients, and opening new office locations.
TZL: The list of responsibilities for project managers is seemingly endless. How do you keep your PMs from burning out? And if they crash, how do you get them back out on the road, so to speak?
RG: There are a lot of expectations for PMs these days as their duties now extend beyond the technical realm into business. You can almost make a case for anything to be included in a PM’s job description, from pursuing work to collecting payments and everything in between. Avoiding burnout is all about providing support resources, training, and mentoring. To support our PMs, we assign a principal-in-charge and a deputy PM to each project. These people are kept in the loop on each project’s progression and serve as dual backups. It’s the responsibility of principals and department managers to monitor PMs closely so that we’re hopefully able to avoid any impending burnout situations. That said, there’s no silver bullet for putting a crashed PM back on the road. You have to spend time understanding the cause and learning about how we can better support them going forward. Sometimes burnout may be the result of a personal situation and the fix may be as easy as reassigning them to a different job duty that works better with their personal situation.
TZL: What is the role of entrepreneurship in your firm?
RG: We encourage and support entrepreneurship in our firm and have several budding success stories. We provide a stage for entrepreneurial development by having a seasoned team of leaders/mentors and other resources in place to help our people build the skills and momentum they need to open new doors. I’m confident that each of our staff that has shown promising entrepreneurial initiative is fully capable of building a team of a dozen or more and I’ll give them full personal and corporate support to do so.
TZL: In the next couple of years, what A/E segments will heat up, and which ones will cool down?
RG: I predict office and institutional campus development and defense contracts will heat up thanks to recent tax cuts and an increased defense budget. Conversely, I foresee transportation and infrastructure suffering due to less federal funds allocated to those markets and a possible political stalemate in mid-term elections.
TZL: With overhead rates declining over the last five years and utilization rates slowly climbing back up to pre-recession levels, how do you deal with time management policies for your project teams? Is it different for different clients?
RG: I’m not a big fan of utilization rates. I believe teams do better when you reward them by their accomplishments rather than utilization rates. I think this practice encourages more learning, more bonding and more efficient time management.
TZL: Measuring the effectiveness of marketing is difficult to do using hard metrics for ROI. How do you evaluate the success/failure of your firm’s marketing efforts when results could take months, or even years, to materialize? Do you track any metrics to guide your marketing plan?
RG: Yes, it’s difficult. We develop goals and metrics for all of our efforts including marketing at our end-of-year strategic plan retreat. We are improving our strategies and metrics with time, but as of now, the most useful metrics we have for tracking the success of these efforts are related to annual revenue goals, opportunities generated, and new client acquisition.
TZL: The last few years have been good for the A/E industry. Is there a downturn in the forecast, and if so, when and to what severity?
RG: Like every other market, A/E is cyclical. Yes, there will be a downturn in the near future. If the lack of interest in reinvesting in infrastructure doesn’t change soon, the downturn will come sooner than later and will be severe.
TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?
RG: Delegation does not excuse you from responsibility.
TZL: While M&A is always an option, there’s something to be said about organic growth. What are your thoughts on why and how to grow a firm?
RG: Organic growth is preferable to M&A. Organic growth controls the rate of growth and allows for less cultural and integration challenges than the alternative by allowing you to hire team members who believe in the same mission, core values, and culture.
TZL: Do you use historical performance data or metrics to establish project billable hours and how does the type of contract play into determining the project budget?
RG: We use historical data as a base and make adjustments for complexity, client, and risk. We estimate project budgets the same way for all contracts, except we may add more project management time if the client needs lots of back up in terms of timesheets, expenses, or reports.
TZL: What’s your prediction for 2018?
RG: It may not end up as great as it started.
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