At the End of the Day
Good management translates into good risk management
- By John P. Bachner
- Dec 03, 2007
The most important function of an
engineering firm is developing engineering
design, right? Wrong. That’s
a lesson that founders of ASFE/The
Best People on Earth learned the
hard way. Their firms were being sued so frequently
that professional liability insurance (PLI)
was unavailable to them from any conventional
source. “Why are we being sued?” the
founders asked. “We’re good at what we do.”
Wrong again.
In order to learn what the problem was,
ASFE had to research the situation, something
it did through extensive case history analysis.
That analysis showed that the founders were not
good at what they did. Yes, they were marvelous
engineers, but they didn’t do that much engineering.
They spent most of their time managing
their firms, and they didn’t do it all that well.
ASFE’s mission today is developing high-level,
high-quality risk management programs,
services, and materials to help its member firms
“prosper through professionalism.” But what is
“risk management?” In reality, it’s just another
way of saying “good management.”
A well-run machine
An engineering firm—or any engineering organization,
for that matter—is a machine designed
to achieve a certain result
that makes its clients
happy. Doing that leads
to client satisfaction,
profit (in private-sector
organizations), and
everything else an organization
needs to sustain
itself over time. The
machine is composed of
distinct elements, each
one of which must operate
well. Each element
also needs to integrate
properly with every
other element for the
organization to thrive.
When the integration
breaks down, or when
any individual element
breaks down, problems
occur. When those
problems get severe enough, a liability claim is
likely. In order to manage the risk of such a problem
occurring, one needs to manage the organization
well, which is why good risk management
is good management.
If you think I’m exaggerating this, select
just about any element of a firm and see how
it tends to integrate with most others. One
example is selling, an activity most engineers
liken to contracting smallpox. In a well-run
firm, selling is an activity designed to complement
a marketing plan which, in turn, is
developed to complement the firm’s overall
business plan. The marketing plan tells the
firm where to fish; selling is the angling. To
be effective, the marketing plan needs to consider
other activities the firm is engaged in, as
well as risk. The firm wants to focus its efforts
on markets that are strong and growing, populated
by good clients and client representatives
who appreciate the high-quality services
the firm can provide. Clients and client representatives
like that seldom have reason to
file a claim and, if such a reason materializes,
clients and their representatives usually would
like to “work it out” without acrimony and
litigation. Clients and client representatives
like that also tend to regard a firm as a “brand”
and so are willing to work with it as it endeavors
to bring new services or project-delivery
methods on line.
So, how does one find such ideal clients
and client representatives? It’s not that difficult,
actually, providing you develop and implement
a well-thought-through plan. Alternatively,
if you have masochistic tendencies, you
could make finding good clients inordinately
difficult by applying the simple expedient of
forgoing any kind of organized selling effort
and just hoping for the best. Indeed, exactly
that happens in many firms: The CEO gives
one and all a pep talk, concluding with, “Now
go out there and sell.” Translation: Our firm
needs a new CEO.
HR has a hard job
In many firms, the person
who leads the selling effort—
the “sales manager”—usually
has other duties. No matter.
In well-run firms, the individual
who takes on any duty
is eminently qualified to do so.
In other words, whoever bears
the “sales manager” title
should know what he or she
is doing.
How does that happen?
That’s an HR issue, of course:
attracting and retaining the
best person for the job. It’s also
an HR requirement to attract
and retain all the other people
needed in the firm. And to
attract and retain them, you
have to reward them, with part
of that reward being professional development.
Professional development is most commonly
thought of as helping staff members advance
their technical skills, but don’t forget that it’s at
least as important to help develop and fine-tune
management and leadership skills. As such, those
in your firm charged with professional development
need to understand how important professional
development is and how critical it is
that professional development doesn’t stop at
technical skills. They also need to recognize how
their work integrates with everything else the
firm does—how each department, or service
area, or whatever-you-want-to-call-it relies on
the success of the other. So don’t concentrate
just on developing sales skills; add in client relations
skills, especially because the most successful
forms of selling and loss prevention are relationship-
based.
Of course, it takes more than just good relationships
and good engineering to satisfy clients
and client representatives. Among other things,
clients sometimes need to receive their bills at
a certain time using a certain format. Assuming
you cannot dissuade the client because the client
really has no alternative, can your bookkeeping
department oblige, or do you hear something
like, “No can do”? If you do, even after you
explain the importance of bending over backward,
“No can do” should translate to, “The
people running our bookkeeping department
need to be educated or replaced.”
What about your IT department? Clearly,
the good folks there have to support the selling
effort and, if your firm offers IT services to
clients (as continually more do), the IT people
also need to be involved in the selling effort.
Clerical staff also may be involved, because people
do judge books by their covers. And everyone
needs to know about telephone and e-mail
“friendliness and efficiency” skills, because communication
is the cover of a personality “book,”
and personalities are what comprise a firm.
And so it goes: No matter where you start
in a firm, no matter which element you consider
first, getting that element’s work done optimally
will involve just about all other elements
in the firm. Good management is aware of those
interrelationships and the integration effort
needed to make the interrelationships bear fruit.
Good management also makes the integration
occur, which is why managing well is the only
way to manage risk.
This article originally appeared in the 12/01/2007 issue of Environmental Protection.
About the Author
John P. Bachner is executive vice president of ASFE/The Best People on Earth. He authors several columns for engineers and allied professionals and is a frequent seminar leader and instructor. ASFE is a not-for-profit trade association comprising geoprofessional, environmental, and civil engineering firms, design/build contractors, and educators.