Tuesday, December 17, 2013

Could More Admin Support Improve Profitability?

In the A/E profession, we have typically associated administrative personnel with overhead. Hence, conventional wisdom is that keeping your admin staff as small as possible improves profitability.

But is this necessarily true? It probably is if you continue to use admin staff in traditional ways. But there may be more creative ways to use admin personnel—and even hire more of them—that can increase your profits.

When I stepped into the operations manager role with my previous employer, I inherited a small risk assessment group that served our clients throughout the western U.S. They were notoriously overworked, consistently putting in 60-80 hours per week. I told the group's manager that I couldn't allow that to continue. We either needed to hire more people or find some way to distribute the workload.

In exploring what their work entailed, I discovered that much of it was doing risk calculations. "Is that something that we could train our admin staff to do?" I asked. The group manager thought that we could...and we did. 

We solved two problems at once: (1) we relieved our risk assessment group of some of the more mundane aspects of their work and reduced their hours (which I believe enhanced their productivity) and (2) we dramatically improved the billability of an admin group that had chronically failed to meet their utilization goals. Plus we billed them at significantly higher rates than for their usual project clerical work, with a higher return on investment than we got with our risk assessment professionals.

In other words, we improved our profitability.

But our expanded use of admin support didn't stop there. We assigned a project administrator to each of our largest projects. Much of the work this individual performed had previously been done by the project manager—documentation, accounting, tracking, coordination, communication. Again, we charged a higher-than-usual rate and achieved a higher ROI than we could with the PM performing these tasks.

I gave my administrative office manager a copy of my position description and asked her to spend a few days determining which of my duties she thought she could perform. She assumed several of those responsibilities (and actually was probably better suited for them than I was), freeing me to spend more time on higher-impact activities—like developing new business. Other managers followed my lead.

Eventually we had the highest headcount of admin personnel per capita of any office in the company. And we were the most profitable.

This approach somewhat parallels the use of paralegals in law firms. Paralegals do administrative and research tasks that enable lawyers to spend more time on higher-end responsibilities like client work and business development. It has been well demonstrated that paralegals can significantly improve profitability. With profits declining in many law firms in the post-recession economy, there is a push to expand the role of paralegals because of their higher ROI (compared to many associate attorneys).

If increasing admin support truly can improve business performance, why haven't more firms taken this approach? I think there are a few common obstacles you have to overcome:
  • You need to hire quality admin personnel. This advice seems obvious, but firms often choose economy over quality when it comes to admin staff. Saving a little on salary can cost you more, especially if you forgo opportunities to involve these individuals in more billable work.
  • You need to banish the notion that only specialized professionals can do project work. There's a sentiment in our business that only degreed engineers, architects, or scientists can do the work. But there are many aspects of project work (and project management) that can be capably handled by "nonprofessionals" with proper training and supervision.
  • You need to bill appropriately for the value of the tasks being performed. Just because admin staff are doing the work doesn't mean you need to charge admin rates. I understand that some clients—such as federal agencies—can make this more difficult. But in most cases you can negotiate alternate billing categories. It can be a win-win scenario: The client pays less for the task, but you earn more.
So where do you start? I'd suggest an inventory of tasks that could potentially be performed by admin staff that are currently being done by your technical professionals or managers. Then determine how to shift the work appropriately. And, as noted above, you may need to create some new billing categories.

By the way, you shouldn't stop with looking at better ways to use admin support. This exercise applies the principle of leverage, which is surprisingly little discussed in our industry. Leverage is basically distributing the work optimally among staff such that your ROI (and profit) is enhanced. In the wake of staff reductions during the worst of the recession, many A/E firms today are poorly leveraged (i.e., they're top-heavy). Expanding the use of admin staff should be but one step towards trying to maximize efficiency and profit-making potential across the organization.


Carl Friesen said...

I love the idea of getting more results from admin staff. Too often they're looked down on as "overhead," but if they generate billable hours particularly with a specialty, they get more respect around the firm and walk taller.

Also consider admin staff for the time-consuming work of social media and content marketing. While much of this work can be automated through tools like Hootsuite, generating quality content and an effective presence on social media is still time-consuming. Often, younger people take to social media naturally, while to staff who are senior (in more ways than one) it's a foreign language. Any thoughts on how to use admin staff for social and content marketing, while still keeping it real?

Mel Lester said...

Thanks for the feedback, Carl! I have encouraged several of my clients to get admin staff involved in supporting marketing activities. While many lack good writing skills, they can be very productive in monitoring social media and collecting and sharing content.