Founders of HILGARTWILSON (Phoenix, AZ), an exemplary multidisciplinary firm that was formed in the middle of the Great Recession.
By Liisa Andreassen
HILGARTWILSON was co-founded by Hilgart and Wilson to provide exemplary consulting services in civil engineering, land use planning, surveying, and construction management. Formed in 2009, both partners faced economic uncertainty, but had an unwavering commitment to their clients and projects. A decade later, they’ve grown the company into a leading Arizona firm.
When founding the firm, both Hilgart and Wilson committed to focusing on the spirit of partnerships that, in addition to its clients, extended to staff and community too. It’s this partnership philosophy and culture that promotes individual excellence in a team environment and provides personal growth opportunities for its talented and professional staff.
In the spirit of partnership, Hilgart and Wilson tag-teamed this conversation to divide and conquer.
A conversation with Ron Hilgart & Darrell Wilson.
The Zweig Letter: What are the three to four key business performance indicators that you watch most carefully? Do you share that information with your staff?
Ron Hilgart: We closely watch profit margins, WIP, and receivables on a per team basis and utilization rates on a per individual basis. This information is reviewed with project managers monthly, with action items noted, which are followed up on throughout the month. New projects under contract are reviewed on a monthly basis, with the goal being for contract amounts of new projects to consistently exceed the corresponding monthly amount invoiced. Cumulative backlog is also tracked. Project managers and directors see all of their financial metrics with a comparison to the company average, but do not see the individual performance of other project teams. Company performance metrics, including revenue growth, are shared with the entire staff at our annual meeting.
TZL: What, if anything, are you doing to protect your firm from a potential economic slowdown in the future?
RH: Historically, the vast majority of our clients have been in the private sector. Over the last few years, we’ve worked diligently to create a better balance of workload and have successfully grown our share of public sector projects, which will help us during an economic slowdown. In addition, we constantly work on fostering new client relationships – even when we don’t have the bandwidth to work for them today – by being a resource and providing expertise in small ways at no cost. This shows the value we can bring and creates a larger potential pool of clients in the event there is an economic slowdown.
TZL: Are you using the R&D tax credit? If so, how is it working for your firm? If not, why not?
RH: We’ve been using the R&D tax credit since 2011, and it’s reduced our tax liability by a significant amount. Other than the consultant fee and some internal accounting and project manager time, this savings goes straight to the bottom line and becomes part of our profit and bonus pool. Any profitable design firm that is not taking advantage of the R&D tax credit is leaving money on the table.
TZL: Does your firm work closely with any higher education institutions to gain access to the latest technology, experience, and innovation and/or recruiting to find qualified resources?
RH: We work closely with Arizona State University, which has been named the No. 1 most innovative university in the country, and has an excellent engineering program. I have been the chair of the ASU Friends of Civil and Environmental Engineering for the past several years, which helps create relationships with ASU faculty and gives us an early look at students for internships and full-time positions upon graduation. Local community colleges are another great resource for recruiting designers and CAD technicians. By partnering with them at career expos and STEM outreach programs, we’ve been able to meet potential candidates and fill numerous positions by those students trained in the latest technology.
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?
RH: Last year we added three new principals, who were all in their mid to late 30s. The size of the book of business is a consideration, however the candidate’s expertise, leadership, management, and other soft skills are important too. Their client following is also considered along with whether they fit our culture.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
RH: First of all, we believe providing a great work environment with significant training and mentoring opportunities will keep our staff engaged and committed to sticking around. With our significant growth, we’re also able to provide fast-paced career advancement opportunities for those who demonstrate they have the capabilities and are deserving. With our firm’s position in the market, we’re able to provide excellent benefits and bonuses to all employees. We also target our median salary by position to be at the 75th percentile of those provided by other engineering firms in the Phoenix metropolitan area, with top performers significantly exceeding the 75th percentile.
TZL: How much time do you spend working “in the business” rather than “on the business?”
Darrell Wilson: Ron and I both came up heavy in the details and it’s hard to change who we are. As such, we are both still in projects every day – probably between 50 percent to 65 percent billable. There is an argument to be made that much more of our time should be spent “on the business,” but at the same time, our closeness to the details of each facet of our work has been significant in distinguishing us from our peers, and we believe, contributed to our success. Our clients know it, expect it, and attribute value to our connection to each of our projects. That said, the last several years have allowed significant growth, success, and market recognition of our young principals. This has provided wonderful opportunities for them and for us. I can now imagine the opportunity to lift our heads up and take a longer and more proactive view of our business, our growth, and our community.
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?
DW: We’re elevating the right folks – strong technicians and excellent communicators. The strength and stature of our firm is a direct result of our people. Our managers distinguish themselves by their ability to communicate, develop, and sustain relationships – both internal and external. Within our organization, those qualities aren’t just obvious to us, but also to their team members and throughout the organization. People tend to want to work for and with them. Although each manager is technically strong, we place particular emphasis on the person and their soft skills. It has worked well as we enjoy little attrition in the firm.
TZL: You want high utilization for profitability, but that means employees are fully loaded with assignments. How do you balance growth, utilization, new clients, and new hires?
DW: Yes, our utilization levels are high and it’s a concern that we pay close attention to for profitability. To date, it’s been a matter of being on a fine edge of staffing levels while still providing the attention and level of service that our clients deserve and expect. The pain associated with the recession is still remembered and we are attuned to remaining lean to minimize the risk of future fluctuations. That said, we are always looking for the right person and when we meet them, we will make the hire even if it’s not to fill an advertised position. On the client side, we resist adding new relationships unless we’re confident it’s the right fit and we have the capacity to avoid the possibility of diluting service levels to existing clients/relationships. We focus our resources on our best relationships and add clients judiciously.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
DW: Work hard, lead by example, and remember that it always comes down to relationships. Ron and I have done this for a long time and we only know how we have done it. There may be better ways, but our means have always been successful for us. We are very proud of our young leaders and we see some of ourselves in them. We believe they have learned well and best by working alongside us.
TZL: What happens to the firm if you leave tomorrow?
DW: Talented and driven men and women will step up, divide responsibilities, and follow through on obligations that were mine. Although many relationships reside with me and Ron, I have complete confidence that those behind us will earn the trust, goodwill, and even the friendships that we enjoy with our clients. I expect that they will do at least as well, and I hope, enjoy a better work/life balance in the process.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
DW: I’m not sure that the “lacking” presumption is sound. We are quite proud of the diversity and inclusiveness within our firm – even more so because those conditions exist naturally. We have always hired based solely on the qualities and qualifications of our candidates sought at that point in time. For no reason other than it is, we have a wonderfully diverse group of fine technicians, communicators, and representatives of who we are.