Today’s employees are different from previous generations. Millennials, who now make up the largest cohort in the job market, have developed a reputation for being job hoppers, ready to move to a new firm at the drop of a hat.
And they are not alone. Numerous surveys of engineering firm leaders over the years continuously rank the shortage of talent as a major threat to both firm and industry success. In addition to struggling to find new engineering talent, firms lose employees to the aggressive recruiting efforts from other firms.
Losing an employee can be traumatic for a firm. Not only are workflows interrupted and client relationships disrupted, but also you lose institutional knowledge and continuity. In a service firm, employees are the most valuable competitive advantage. In today’s tight job market, replacing an employee is hard and expensive. Industry analysts put the cost of replacing an employee at 50 percent of their annual salary.
All told, engineering firms are better off keeping current employees.
To learn how firms can better retain their employees, Engineering Inc. spoke with Mark Goodale, principal at the management consulting firm Morrissey Goodale, LLC as well as leaders of three firms that have long-tenured teams, Brian Bowers, president, Bowers + Kubota in Honolulu; Paul Grosser, executive chairman, P.W. Grosser in Bohemia, N.Y.; and Brian Sullivan, principal, Sullivan Engineering in New York.
“Millennials come to the workplace with a different set of priorities,” Goodale says. And those priorities may be the reason for their wanderlust, which ultimately has little to do with recruiting by the firm down the street, he adds.
“They want to work for a firm that has a higher purpose, and they want the opportunity to master their skills and improve the firm’s work,” he says. “If you’re a ‘that’s the way we’ve always done it’ type of firm, they are going to leave.”
Changing that mindset and instead operating as a firm that prioritizes soft issues like “a higher purpose” can pay off with more than just millennials. Firms that have an employee-centric focus have substantially better customer relationships, higher productivity, better retention, fewer accidents, and a better bottom line, according to Gallup. Specifically, the highest quartile of “employee engagement” firms has 21 percent higher profit-ability than those in the bottom quartile.
When Sullivan started his structural engineering firm in New York more than a decade ago, he prioritized people over profit. “It was always about the people rather than the revenue,” he says. “I wanted to be part of something more than just providing good quality engineering services.”
“When you create a great place to work, it’s a no-brainer that people will stay.”
BRIAN SULLIVAN
PRINCIPAL
SULLIVAN ENGINEERING
“The idea was to have a nice place to work,” says Grosser in regard to P.W. Grosser, a 70-person environmental engineering firm. “We hired people whom we knew and liked, and that’s largely how we’ve grown.” People who came on as interns are now vice presidents, and we’re starting to have people age out of the company.”
Such a hiring strategy tends to yield a staff that enjoys working together and shares similar values. And when that happens, employees stay with the company.
In the hiring process, Sullivan Engineering focuses on the person rather than professional capabilities. “We can train them in technical skills, but if they don’t have the same core values that we do, it’s not going to be a good fit,” says Sullivan.
The firm has five core values: empower people, honesty and integrity, forward thinking, humbly confident, and entrepreneurial mindset.
“We have a three-interview process,” Sullivan says. “In the first interview, we focus on our core values and the person. In the second, we get a little more technical, but we revisit our core values. In the third interview, we come back to those core values. By that point, we have a good sense of whether we’re a match.”
In such a tight job market, it may seem that these firms are restricting themselves by searching for very specific character traits, but Bowers says the opposite is true.
“We’re a very small market and a very remote market, and we have the second lowest unemployment rate in the country, so recruiting can be very difficult,” says Bowers, who leads the 200-person firm. “However, we established a reputation as a great place to work, so good people want to join us.”
One caveat is that the hiring process tends to be arduous. He recalled having to conduct 30 interviews to find the right two project managers. “But these are people who will stay with us and help us grow and challenge us to grow,” says Sullivan.
Grosser says the firm’s reputation as a great place to work has also reaped benefits in the marketplace. “Clients like to hire firms that take care of their people,” he says. “They feel good about hiring you.”
Bowers + Kubota expends a lot of time, energy, and money building a family atmosphere among its widely dispersed staff. “We have offices on all the islands, so staying connected is a challenge,” says Bowers. “Three times a year we bring all the employees and their families together, a picnic in August, our holiday party, and our annual ESOP owners meeting.”
In addition, the firm sponsors regular wellness and health events and a variety of community service projects, such as Adopt a Highway initiatives on each island. All the events and projects are organized and managed by employee committees.
Any firm looking to retain good employees must also start with a competitive compensation package. “We’re always scanning the market to make sure that we are near or at the top,” says Bowers. “One thing that I know is important is health care, and we go well beyond.”
Once the requirements for employee compensation and benefits are met, if the employees are satisfied with the work environment, they will likely exhibit a profound loyalty to the company.
“Good compensation is critical,” says Sullivan, “but if it’s just about compensation, people are going to leave to chase a few dollars more. When you create a great place to work, it’s a no-brainer that people will stay. Our employees tell us that firms have tried to recruit them, and they didn’t even go to talk to them.”
These three firms also shine the light on the individual. All hold regular employee reviews—Bowers + Kubota and P.W. Grosser schedule them twice a year and Sullivan Engineering does them quarterly—but none of them focuses on past performance.
“Clients like to hire firms that take care of their people.”
PAUL GROSSER
EXECUTIVE CHAIRMAN
P.W. GROSSER
“These aren’t about telling people what they did wrong,” says Grosser. “We discuss their career path, talking about the things they need to do over the coming months to continue their growth.”
Furthermore, defining how an employee’s career path interconnects with the company’s end goals is critical.
“We have open-book management,” adds Sullivan. “Our employees know our end goals, and they know the opportunities that will open for them in the future. They can go as far as they want to go within the organization.”
These firms are not resting on their laurels. They are constantly on the lookout for ideas to augment their employee engagement.
The firm has even started its own leadership training program. “We’re training our next crop of emerging leaders in what it takes to be a leader and successful at Bowers + Kubota,” Bowers says.
Industry analysts put the cost of replacing an employee at 50 percent of their annual salary
P.W. Grosser is reaching out to employees at both ends of their careers. “We’re starting to have some people age out,” says Grosser. “They want to slow down but not retire, and we want to keep their experience and wisdom in the company, so we are working with them to reduce their hours and responsibilities.”
For younger employees, P.W. Grosser has set up a counseling program to help them manage their student loans.
Sullivan Engineering has formalized its internal training program, mandating that every employee earn 12 continuing education credits annually. “We didn’t used to hold everyone accountable, but this year we are,” says Sullivan. “We want them to grow and learn.”
The firm also gives each employee two paid days off each year for volunteer work. “We’re pushing that a little harder too,” he says. “The benefits of volunteering are long term for the person.”
Ultimately investing in employees can be expensive; however, the end results are immeasurable. “We spend a lot of money on our culture,” says Sullivan, “We don’t expect to be able to see the return on a line item. We’re confident that we’re getting a good return on our investment.”
Gerry Donohue is ACEC’s senior communications writer. He can be reached at gdonohue@acec.org.
Not surprisingly, firms that are successful at retaining employees score well in the many Best Places to Work surveys that regional and industry media run. The three firms featured in the main article regularly enter these surveys, using the results for the public relations and recruiting value and to improve.
“It’s useful to know who we are competing with in our market and our industry,” says Brian Bowers, president, Bowers + Kubota in Honolulu.
“We learn what we could do better in our firm in order to keep our employees from going elsewhere,” says Paul Grosser, CEO, P.W. Grosser in Bohemia, N.Y.
Bowers says he always pays extra for the detailed report of these surveys because he gets a much more granular sense of what his employees like and do not like.
“We look at the suggestions, and then we give feedback to our employees about what we’ll do and what we don’t do,” says Bowers. “We see these surveys as yet another opportunity to engage with our employees and to learn what they think we need to change to become a better firm.”