Time to Prune the Tree?
Happy Friday,
In the roughly 15 years since the engineering economy emerged from the Great Financial Crisis, firms have operated under one overriding assumption: We need more people. So everyone leaned heavily into recruitment at the same time. But when there aren't enough people to go around, the result was predictable:
You must lower the bar.
Not intentionally. But when you desperately need three engineers and only two qualified candidates show up, the question shifts from “Is this person exceptional?” to “Can this person do the job?” to “Does this person have a pulse?”
Then there's the secondary consequence.
When you spend years telling everyone how hard it is to find people, it becomes very difficult for leaders to let anyone go, even when they should.
They talk themselves out of it. Workload’s down. It’ll come back. Utilization is slipping. More work is coming. This guy’s a marginal performer. Yeah, but remember how hard it was to fill that position. Our PM's are screaming for help; we can't cut anyone. I'll be second-guessed if I cut this guy when we desperately need people.
So the hiring threshold went down at the same time the dismissal threshold went. Exactly backwards, and the perfect recipe for mediocrity and trouble.
Fifteen years on, and organizations have accumulated people faster than capability. The result is surprisingly low utilization, more overhead, lower profit per person, greater project and people risk, and more management complexity.
Firms got bigger, not better
That's the important point to reflect on, because the challenge the industry faces now is very different from what it's been.
Clients will soon expect new capabilities, more output, faster delivery, and yes, lower cost. New competitors will emerge, some exceptionally well funded. Established engineering organizations need capital now to invest in technology, training, systems, and entirely new ways of organizing the business and doing work.
That makes organizational strength more important than organizational size.
It's counterintuitive, but it may be time to prune the tree to make the business stronger and more resilient. To redirect financial resources from weaker growth toward the branches with the greatest potential in the years ahead.
Punchline: Will the top engineering firms of the future be the ones with the most people? Seems unlikely. They're more likely to be the ones with the highest concentration of exceptional people fully leveraging technology. People with exceptional insights, strong communication and trust-building skills, focused on the right business strategy with the tools and systems needed to compete.
It's probably time to make excellence, not growth, the top priority again.
Have a great weekend,
Dave
Feedback, blowback, and suggested topics are always welcome: dave@goodnewsfriday.com
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