Word on the Street: Issue 197

In observance of Memorial Day, there will be no Word on the Street next Monday. Our next issue will be published on Monday, June 3.

Seven Takeaways from the ACEC National Convention

The Morrissey Goodale team was on the ground last week in our nation’s capital at one of the industry’s premier and longest-running events—the ACEC Annual Convention & Legislative Summit. Not for the first time, we were happily wearing multiple hats.

First, we were once again proud to be a Patron Sponsor of the convention.* Second, we had the opportunity to share our perspectives and market knowledge with the attendees—Jon Escobar presented “An Industry in Flux: Consulting Engineering in 2024” while Nick Belitz presented “The Impact of Private Equity and M&A on the Valuation of Employee-Owned Firms.” Third, as an exhibitor, Corinne McCanse—our VP of events, sponsorship, and education—and her team enjoyed meeting many of the attendees at our booth and sharing with them our bespoke Morrissey Goodale socks (a shockingly popular item). And fourth, we networked—big time. We reconnected with old friends and clients at the always-fun receptions. And we made new connections, networking with future friends and clients. 

One of our team’s top networkers is Katharine Van Leer of our Durham, NC, office. Her job is all about making connections for our buy-side clients to help them to grow their businesses domestically or overseas. Here are seven of her takeaways from her conversations with attendees and meetings that she attended last week:

1. Just like Bigfoot: That’s how hard it appears to be to find a 28-36-year-old engineer these days. Across the industry, with firms large and small, the most elusive and desirable hire is the professional with eight to ten years of experience.

2. What the AI? Firms are still reluctant to dabble in AI, despite everyone telling them it’s the future. Multiple presentations attempted to demystify the challenges of AI and demonstrate how firms were integrating simple AI tools to improve project execution, project delivery, and overall firm operations. Hint: Microsoft Copilot, ChatGPT, and Claude (really, who’s in charge of branding here?) are your friends; you just need to know how to prompt them.

3. Push the pricing: Inflation has successfully pushed up employee salaries, sometimes as much as 30%, but firms are struggling to procure project fees to match these hikes. With some record years on the books, the profits are lagging due to stagnant industry rates and clients unwilling to pay more. 

4.  Fixed fees for DOTs? There was a feeling that DOTs were moving to a lump-sum model, which has created some optimism among these firms. This change in the model allows firms to plan ahead, have more flexibility in hiring, and become a more functional business overall.

5.  The office: Many firms are still struggling with the post-COVID world of the remote/in-office struggle. While few have fully come back, many are creating a policy of three days in the office and hope, pray, and beg that staff will show up for a few more. With trouble retaining employees, many CEOs feel limited in how much further they can push people to the office.

6. “Hello, fellow kids”: Several CEOs shared how they engage with their younger employees, from book clubs to axe throwing (that escalated quickly) to Friday afternoon beer. All in an attempt to help bridge generational gaps. On the flip side, many of these younger employees are craving mentoring and attention from leadership and executives, so these overtures are welcomed.

7. People power: Many CEOs see a need to prioritize developing soft skills with their next-tier employees, both to create more doer-sellers and for leadership development. While AI can help short-cut technical expertise, it is those soft skills that are going to continue to create value for these firms. 

Summarizing her time at the convention last week, Katharine said, “Overall, there is optimism about the future and excitement for continued growth in 2024 and beyond.”

*Our continued sponsorship of both the annual Spring and Fall ACEC Conventions is part of our ongoing support of the advocacy work that ACEC does for the industry—as is our annual funding of the two most valuable ($15,000 each) ACEC Research Institute Scholarships.

To connect with Katharine Van Leer, email her at [email protected].

To connect with Mick Morrissey, email him at [email protected] or text him at 508.380.1868.

Soft Skills in the Digital Age

In the landscape of professional services, where the mastery of soft skills has long been hailed as paramount, the advent of advanced technology and the normalization of hybrid and remote work models are heralding a sizable shift. As the AE workforce becomes increasingly diverse—with baby boomers, Generation X, millennials, and Generation Z coexisting and collaborating—philosophies and deployment of soft skills are being put into a blender.

Embracing Technological Advancements

Long gone are the days when a firm’s success rested solely on firm handshakes and face-to-face interactions across mahogany desks. While such traditional modes of engagement remain cherished by some, the digital age demands a more tech-savvy approach. The inclination of your employees—and your clients—is toward using digital platforms for communication, business development, mentorship, learning, and relationship building.

Virtual communication: With the hybrid/work-from-home model having become the norm for the majority of industry firms, the ability to effectively communicate through digital mediums such as videoconferencing, email, and instant messaging is vital. Virtual meetings, once an occasional necessity, are now integral to daily operations, requiring proficiency in conveying ideas, building rapport, and resolving conflicts remotely.

Tip: Prioritize clarity and conciseness. When communicating through digital mediums such as email or instant messaging, aim for clarity and brevity. Avoid jargon or ambiguous language, and use bullet points or numbered lists to organize information for easy and quick comprehension.

Networking in the digital sphere: Online platforms and professional forums continue to emerge as fertile grounds for cultivating professional relationships and exploring business opportunities. Millennials and Gen Zers adeptly navigate these virtual landscapes, leveraging social media to showcase expertise, engage with industry peers, and expand their professional circles beyond geographical constraints.

Tip: Get involved. Actively engage in online communities and discussions relevant to your firm’s target markets to build connections and establish thought leadership. Share valuable insights, participate in discussions, and offer assistance to demonstrate expertise and build credibility.

E-learning and mentorship: Traditional mentorship models, characterized by in-person guidance and face-to-face interactions, are being reimagined through e-mentoring programs and virtual coaching sessions. Technology facilitates seamless knowledge transfer across generations and geographical boundaries, empowering junior professionals to access mentorship and learning resources tailored to their needs and preferences.

Tip: Develop virtual mentoring channels. Create virtual mentorship opportunities within your organization. Encourage employees to approach potential mentors with specific goals and objectives for their mentorship relationship, and encourage them to actively seek feedback and guidance to maximize their learning and development. By the way, don’t exclude yourself from the experiment.

The Persistence of Human Connection

Amidst the rapid digitalization of professional services, one timeless truth remains unchanged: the centrality of human connection. Regardless of technological advancements, the essence of soft skills lies in fostering meaningful relationships, understanding client needs, and collaborating effectively toward shared goals.

Empathy and emotional intelligence: While technology streamlines processes and enhances efficiency, it is empathy and emotional intelligence that underpin successful client interactions and team dynamics. The ability to understand and respond to emotions, anticipate concerns, and tailor solutions to meet unique requirements distinguishes exceptional professionals from mere service providers and order-takers.

Tip: Ask questions and listen for understanding—not agreement. Practice empathy and active listening to deepen understanding and build rapport. Ask open-ended questions, allowing clients ample opportunity to express themselves fully. When paraphrasing to confirm understanding, use affirmative responses to convey genuine interest and engagement. Leverage videoconferencing whenever possible to create a more personal connection and better gauge non-verbal cues, reinforcing your commitment to understanding and addressing concerns and objectives effectively.

Collaboration and teamwork: In a hybrid or remote work environment, fostering a culture of collaboration is imperative for driving innovation and achieving collective success. Soft skills such as active listening, conflict resolution, and constructive feedback remain essential for nurturing cohesive teams that thrive amidst digital disruption.

Tip: Invite participation. Foster a culture of collaboration by encouraging open communication, sharing credit for successes, and soliciting input from team members virtually. Embrace diversity of thought and perspective in digital collaboration, prioritizing collective goals over individual achievements while leveraging digital tools for effective teamwork and communication.

Adaptability and resilience: The rapid pace of technological change demands adaptability and resilience from professionals across generations. Whether it’s mastering new software tools, navigating virtual team dynamics, or responding to unforeseen challenges, the ability to embrace change and bounce back from setbacks is indispensable in an evolving landscape.

Tip: Don’t wallow in it. Develop resilience by maintaining a positive attitude, seeking support from colleagues or mentors virtually during challenging times, and focusing on solutions rather than dwelling on setbacks encountered in digital workspaces.

Cultivating a Holistic Skillset

As professional services firms navigate the intersection of human interaction and technological innovation, the key to success lies in cultivating a holistic skillset that encompasses both technical prowess and soft skills mastery.

Continuous learning and development: Embracing a growth mindset is essential for staying abreast of evolving technologies and industry trends. Professional development initiatives that blend technical training with soft skills enhancement empower professionals to thrive in a dynamic environment where the only constant is change.

Tip: Take responsibility for your own learning. Own your professional development by setting aside time for virtual learning and skill-building activities. Seek out opportunities for virtual training, workshops, or online courses that align with your career goals and interests, leveraging digital resources to enhance your knowledge and expertise.

Diversity and inclusion: Recognizing the diverse perspectives and strengths that each generation brings to the table is instrumental in fostering a culture of inclusion and innovation. By harnessing the unique talents of each generation, professional services firms can cultivate multidimensional teams capable of tackling complex challenges with creativity and agility.

Tip: Be deliberate. Actively promote diversity and inclusion within your organization by advocating for diverse hiring practices and participating in virtual employee resource groups or diversity initiatives. Foster an inclusive work environment where all voices are heard and valued virtually, leveraging digital platforms to facilitate diverse perspectives and contributions.

Ethical leadership: As technology permeates every facet of professional life, ethical considerations become increasingly critical. Upholding ethical standards and integrity in decision-making is essential for building trust with employees and clients, preserving reputation, and safeguarding against the ethical dilemmas posed by emerging technologies.

Tip: Set a high bar. Take responsibility for ethical decision-making, seek guidance or clarification virtually when faced with ethical dilemmas, and hold yourself and others accountable for upholding ethical principles in digital interactions and operations.

The evolution of soft skills is not a departure from humanity but a reflection of its enduring essence in a digitally driven world. While the tools and mediums of communication may evolve, the fundamental importance of empathy, collaboration, and adaptability remains unchanged. As the generations come together to shape the future of work, the intersection between technological advancements and human connection is becoming the birthplace of long-lasting competitive advantages.

For more insights, call or text Mark Goodale at 508.254.3914 or email [email protected].

Market Snapshot: Industry KPIs

• Architecture billings have been weakening, and new design contracts have flattened, according to Kermit Baker, the chief economist of the American Institute of Architects (AIA). In terms of AIA/Deltek Architecture Billings Index (ABI) scores, institutional sector projects are performing better.
•  The Dodge Momentum Index (DMI) showed progress in April, increasing about 6% from March. The improvement was mainly driven by the commercial category, more specifically data center projects going into planning stages.
• Total construction starts, as forecasted by ConstructConnect, were adjusted down to a 3.3% year-over-year change from 4.5% reflected in their quarterly forecast published in February. Civil verticals are trending towards a 13.2% increase this year. Nonresidential building is forecasted to decline by 4.8%, and residential, pulled by the single-family market, will be up 6.4% (multi-family is expected to be flat).
• Construction spending based on U.S. Census Bureau data remains strong. Construction leaders are more confident in market growth for the first time since early 2022. ENR’s Construction Industry Confidence Index (CICI) jumped 10 points in the first quarter. 
• Associated Builders and Contractors reported that its Construction Backlog Indicator increased to 8.4 months in April, up by 0.2 months from the prior month but down 0.5 months from April 2023. The highest year-over-year increases were in the infrastructure industry, middle states, and companies with revenue between $30 million and $50 million.

For the latest insights on U.S. regions and AE markets, check out our 2024 AE Market Intelligence Webinar. Click here to access recording and materials.

To learn more about market intelligence data and research services offered by Morrissey Goodale, schedule an intro call with Rafael Barbosa.

Weekly M&A Round Up

Four more deals in the Western States: Last week we reported an additional four deals in the West, in Colorado, Oregon, Washington, and Arizona. International deals were announced in Australia, the UK, Canada, and the Philippines. To learn more about M&A activity in this fast-growing region, join over 200 industry executives and investors from all across the West and beyond at the 10th annual Western States M&A and Business Symposium on June 12-14. You can check all of last week’s M&A news here.