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The Top 3 Concepts Every AEC Project Manager Should Know


John Mathew
JohnMathew
Product Director
BST Global

The range of concepts a Project Manager of professional services should know spans both technical and commercial aspects of project delivery. The commercial side tends to be the least understood, but is a key area to master in order to drive successful project outcomes.

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The Top 3 Concepts Every AEC Project Accountant Should Know

Evelyn March
EvelynMarch
Group Director
BST Global
If you don’t have profitable projects, you can’t have a profitable company – that’s what makes the Project Accountant’s role so important. With one foot in accounting and another foot in project management, these are the three main concepts every Project Accountant needs to know. Project Accountants need to speak two languages: accounting and project management. Picture this: on one end, when the accounting team reviews revenue for the firm, they may require detail of what projects contributed to that value. And on the other end, while the Project Manager is aware that their project produced revenue, they would like additional detail on the tasks that went into producing that revenue. But the two teams don’t speak the same language, making it hard to get the information they need from each other – that’s where your role as a Project Accountant comes in. You service both teams by providing a financial overview when needed, and project details when needed. Read on to see how I tapped into my 25 years of experience in the AEC industry and pulled together the three major concepts every Project Accountant should know in order to effectively communicate both financial and project overviews. Contract Fee Types As soon as your firm wins a project, the project planning begins, and both the project and accounting teams become interested. The project management team schedules, executes, and authorizes client billing for the project, and the accounting team recognizes the revenue generated from completed work on the project. But what determines the amount and method the project team must approve to get billed, and the amount of revenue that the accounting team is supposed to book? It’s the contract fee type. Let’s look at a few of the common contract fee types you might come across in an AEC firm. For example, if you’re dealing with a Cost Plus contract type (also known as Time and Material), this means all time and expenses charged to the project are to be billed and accounted for as revenue. On the other hand, if a contract is written as a Cost Plus Maximum contract, this will function as a Cost-Plus contract, but the amount of time and expense will be limited to a certain value. Those are pretty straight forward, but the next set of contract types can get a little tricky – so I’ll provide an example for each. For Lump Sum or Fixed Price contracts, these specify a fixed amount that will be paid for services based on a percentage of completion, regardless of the time and expense attributed to fulfilling the service. So, let’s say you have a fixed price contract of $10,000. Based on this contract, you will bill $10,000 for services rendered. Whether it costs $5,000 or $11,000 to complete the work, your firm will receive the fixed price of $10,000. As work is executed, a percent complete invoice can be generated. When a percentage of the work completed is selected, an invoice of percent complete multiplied by $10,000 is sent for payment. Only one more to go! For Cost Plus Fixed Fee contracts, these projects are built to reimburse your firm for two items: the cost of services and a fixed fee that is pre-defined by the contract. Here’s what I mean: Imagine that you’re planning for an upcoming project, and your team’s salaries average $50 per hour. Since the project is estimated at 100 hours – the labor cost calculates as $5,000. Next, you’ll account for the cost to run the business. In this example, it’s 1.8 times the cost of your payroll, so your overhead calculates as $5,000 X 1.8 = $9,000. This makes your total cost $14,000 ($5,000 + $9,000). Now for the fixed fee part. Your client gives you a fixed fee of $1,000, which brings your total cost plus fixed fee to $15,000 for the contract ($14,000 + $1,000). This is the project overview part you need to be able to communicate. By understanding which fee type you’re working under, you can monitor the time and expense project details and alert the Project Manager when charges are approaching the contract fee limit. This can be a tremendous benefit to the project management team since it helps avoid project overruns that can be detrimental to the profitability of a project. Once you’ve captured the time and expense details, it’s important to understand the meaning of revenue: revenue, is the booking of income that is derived from completed work. In understanding the point at which your accounting team recognizes revenue, you can provide the proper revenue value they need for posting. Revenue Recognition Now that you understand how much can be accounted for as revenue based on contract type, the next step is to know when that revenue can be recognized. To know when to recognize revenue, the first thing you need to do is determine which accounting method your firm has adopted. We’ll explore three possible methods and see how each method builds on the previous one, adding more visibility to your firm’s revenue. Here are the three stages at which revenue can be booked: When the payment is collected When the invoice is sent When the work is completed The first method is called cash basis accounting, which states that revenue will be recognized when payment is received. Because revenue is booked only when you receive payment, this method mirrors your firm’s bank statement and provides a true picture of cash flow. Next, is accrual basis accounting based on accounts receivable. With this method, revenue is recognized when the invoice is sent. At this point, it shows when you requested payment from your client (the invoice), and when payment was received (cash basis accounting). Using the accrual method based on accounts receivable allows you to calculate how long it takes between sending an invoice and receiving payment – which the cash basis accounting method alone cannot give you. The last method, and the most comprehensive, is accrual basis accounting based on Work in Progress. Work in Progress For the most detailed overview of your firm’s revenue, the accrual-based Work in Progress method is used. In this case, revenue is recognized when the work is done. By recording revenue when work is completed, it allows you to monitor the time between completing work and invoicing the client, and then from invoicing the client to collecting payment. Now you’ve got the whole “revenue” picture! And because the project management team is already aware of when work is completed and billed, this method allows the accounting team to have that same knowledge. Having that information earlier on allows the accounting team to determine how those milestones affect the firm financially when each one occurs. When using Work in Progress, you’ve accounted for every stage of the revenue journey – providing the greatest level of insight of all three accounting methods. Are you starting to see why it’s so important for you to understand how to evaluate time and expense details of a project as they’re affected by contract types? Knowing this information helps you fulfill the two major responsibilities you have for each team: Checking in on Project Managers to ensure work is staying within contract limitations Reporting to Accounting Managers on the amount of income that can be earned based on completed work Conclusion In an AEC firm, money is mostly spent and earned because of projects. And with several projects going on at once, with all potentially different ways of earning money based on fee types – Project Accountants need to understand how to speak to both the project details, and the financial results of those project details. That’s why, as a Project Accountant, you’re tasked with a major undertaking: staying up to date with the relevant terminology in both worlds. Luckily, we created a tool to help you with this. Introducing: The Ultimate ERP Glossary for AEC Firms. As this glossary goes through the span of the entire project lifecycle, you’ll find 150 of the most commonly used AEC terms that cover accounting, project management, project delivery, and much more. DOWNLOAD GLOSSARY NOW

The Top 3 Concepts Every AEC Accounting Manager Should Know

Gary Dwyer
GaryDwyer
Product Director
BST Global
Without an Accounting Manager’s ability to manage and communicate the health of the business, stakeholders cannot make well-informed decisions. In understanding these three concepts, it will help shape the foundation you need for that communication. Having gotten to this point in your accounting career, I believe it’s safe to say you’re already familiar with the basics: Balance Sheets, Income Statements, Journals, etc. But past the basics, there are concepts unique to Accounting Managers in the architecture, engineering, and environmental consulting (AEC) industry. Understanding and managing these concepts is an important part of effectively communicating your firm’s financial position to primary stakeholders – after all, that’s a large part of what you do. So, by using my decade worth of experience in the AEC industry, I’ve created a list of the three major concepts Accounting Managers should understand when speaking to executives. Once you’ve read through this post, you can be confident that you’ll have the foundation you need to properly communicate the status of the business to your primary stakeholders. Cash Management Working CapitalThe cash available for day to day operations. First things first: your firm needs working capital to meet short-term obligations. But how do you know what your firm’s current working capital even looks like? By using the acid test ratio. Acid Test RatioCurrent Assets – Current Liabilities The acid test ratio shows your firm’s ability to successfully meet its short-term obligations. The goal of this test is to have current assets exceed current liabilities. This is critical: if your firm is unable to cover these short-term obligations in a timely manner, it can eventually lead to insolvency. That’s why the old "cash is king" mantra isn’t going anywhere, because you need cash to keep your business up and running. And as an Accounting Manager – these are words you should live by. Day in, and day out, you need to ensure your firm is optimizing its cash resources. To help, I’ve identified two elements you can focus on to improve your firm’s cash flow: Proper management of your vendor payments Effective collection on your outstanding accounts receivable The following sections of this post will discuss how to address these items. Procure to Pay Properly managing your vendor payments is an integral part of the procure to pay process in an AEC firm. This process has a direct impact on cash management and working capital needs because you have to record both the price your firm is required to pay for goods and services and how quickly your vendors need to be paid. The initial part of procure to pay is recognizing a need for goods and services – which can come from different areas. For instance, you may need a subcontractor to perform work on a task, or you may have hired a new Controller that needs a laptop. Once you recognize demand, then the next step is to think about how to meet that demand. You may not always need to purchase goods and services to meet demand if you have the resources internally (e.g. you provide the new Controller with a laptop your firm already has). But for the times where you do need to buy, the next step is to place a purchase order with a vendor (assuming you already know the vendor you want to use and the price you must pay them). Here’s why purchase orders are an important next step: It sets out the agreed terms for the purchase It’s a pre-approval for the purchase and helps eliminate surprises when the vendor’s invoice arrives It records the commitment and helps provide a true picture of project profitability The vendor’s invoice can be validated against the purchase order to ensure the correct quantity and price have been charged The bottom line is, purchase orders are a great way to cover your bases when it comes to knowing the commitment to your vendors.   Electronic Fund Transfers (EFT)A payment method where a company pays their vendor by electronically instructing their bank to transfer money to the vendor’s bank account without the need of a check or paper money changing hands. Traditionally, when it came time for payment, vendors were paid via checks. And while this is still an approach for many firms today in the United States, it is now becoming more common to use Electronic Fund Transfers (EFT). EFT has become a more secure form of payment with its improved fraud controls and ability to reduce costs for your firm. Days Payable Outstanding (DPO) Ratio [Accounts Payable / (Cost of Goods and Services / 365 Days)] Now that you have a procure to pay process in place, how do you communicate your firm’s performance in being able to manage vendor payments to your executive team? A good place to start is by calculating the Days Payable Outstanding (DPO) ratio. This simple ratio compares your accounts payable balance to your daily purchases and shows the average number of days it takes to pay your vendors. For example, if current terms with your vendors are to pay them in 30 days, and in doing the DPO calculation you find your average payment time is 25 days, this presents an opportunity for you. You’ll want to analyze this value and find a way to get the payment time closer to 30 days, which allows you to keep that cash within your firm for longer. So, be sure to focus on these two items in the procure to pay process: Strive for a good DPO ratio so it shows your executive team that you’re effectively managing your vendor payments Properly document the purchase process. This not only ensures you’re tracking all actual and committed costs on a project, but it also helps you avoid unexpected expenses that can impact your company’s bottom line – making your executive team very happy Billing Process Finally, you have billing. Billing is an important process for all companies, because performance in this area has a direct correlation with how soon your firm can bring money in for the work performed. This process is generally more comprehensive for the AEC industry than it is for others, as the format of an invoice and its contents may vary based on the type of contract or a client’s requirements. PrebillA draft invoice used to verify validity of transactions prior to submitting an invoice to a client. For most AEC firms, this requires invoices to be reviewed for accuracy by someone directly involved in the project (typically, this will be your Project Manager) before an invoice can be submitted to the client. That’s what the draft invoice, often called a prebill, is used for. As an Accounting Manager, this review process is helpful to you for three distinct reasons: You can ensure charges on a project are valid and charged to the proper task You can ensure the price is at the rate or markup agreed upon with your client You can ensure contract terms, payment terms, and client information is accurate For some projects, having the invoice is not enough – you need to attach documents to validate the charges on the invoice. This validating documentation is commonly referred to as billing, or invoice, backup and can include: expense receipts, vendor invoices, and signed timesheets. In some cases, clients may withhold payment until this backup information is delivered – potentially causing major payment delays. To prevent this, you’ll want to consistently provide timely and accurate backup information when billing. Days Sales Outstanding (DSO) Ratio (Accounts Receivable / Earned Value) X Number of Days To communicate the effectiveness of your collection process to your executive team, it’s best to calculate the Days Sales Outstanding (DSO) ratio. This measures your firm’s effectiveness in managing outstanding receivables. In producing correct and complete invoices, along with providing the required billing backup, this will help you remove barriers in your collection process and will have a positive impact on your DSO. What it comes down to, is understanding all the nuances of the billing process to help you make it as efficient as possible. The faster you can collect money for the work being done, the better your cash flow will be. Sounds pretty intuitive right? It is – but it takes discipline, and some serious effort to get this process to be the lean money collecting machine you, and your executive team, want it to be. Conclusion From cash management to the billing process, you need to understand how all these processes work, so you can relay relevant information to your firm’s decision makers. But don’t forget: your communication goes well beyond that. You also need to communicate critical information to the project accounting and project management roles in your firm. And because accounting, project accounting, and project management roles work together so closely, it’s important for each role to have a fundamental understanding of what the other roles do to contribute to the success of an AEC firm. That’s why we created The Ultimate ERP Glossary for AEC Firms. Loaded with the latest AEC industry jargon – 150 terms to be exact – not only will you see a whole host of terms related to Accounting Managers, but also to your peers. This will help you better understand your firm as a whole, as this tool spans the standard workflow of the entire project lifecycle. Click the link below to get your free copy today! DOWNLOAD GLOSSARY NOW

Is Your Workplace Dope?

Evelyn March
EvelynMarch
Group Director
BST Global
Are you creating a dope workplace? And by dope, I’m sure you’re wondering if the slang is being used as an adjective, as in: very good. Or if the reference is to the noun, meaning an illegal drug taken for recreational purposes. While the word ‘dope’ carries several meanings, it’s similarity to the word ‘dopamine’ is purely coincidental. But the kinship is undeniable; they both spawn continual reward-seeking behavior. In 1958, the chemical dopamine was discovered by Dr. Arvid Carlsson. Essentially, it is a neurotransmitter in the brain, which controls the stored memory function that tells us we have completed something good, and to repeat that behavior to receive a reward. For patients with Parkinson’s, dementia, and Alzheimer’s diseases, Dr. Carlsson discovered that this neurotransmitter was in declination. His discovery paved the way for science to formulate the utilization of dopamine to lessen the effects of these disorders. Equipped with this core knowledge of dopamine’s effect on behavior, several deductions can be made. For example, dopamine helps us learn things quickly and permanently. But continued releases can cause a ‘seeking’ or addictive behavior. Finding Dope Employees In the business world, we as employers naturally seek out employees with adequate dopamine levels, whether we realize it or not. This is revealed by how well they’ve honed the craft or skill that makes them an employable candidate. Once we hire these candidates, it’s important to continue to excite this neurotransmitter through continual learning opportunities, as it leads to personal and professional successes. But, are there junctures where employers over-excite this chemical reaction? And if so, what are the consequences? A Connected World Take connectedness. Our world is connected. Our employees are connected. And that can be a good thing; after all, collaboration is the precursor to accomplishment. Having employees interact on ideas and problems leads to innovation and achievement. We send emails to those who provide the best input, often adding them to the top of the recipient list. What’s more, it’s not uncommon to see employees send a text or address a social media notification during work hours. We have accepted this practice as social norms that are a by-product of the instant information age we live in. Production Versus Disruption But when we see those email or social media notifications appear, the feeling of being sought after for interaction causes a rapid fire of that seeking neurotransmitter - dopamine. The dopamine rush creates an anticipation of reward that once ignited, the object that gave us that rush can become the object we seek. In this rapid-fire environment, the question arises: are we creating production or disruption? Is the portico to our dopamine rush allowed into work meetings? How many times have you been in a meeting and you or your neighbor glances at the buzzing phone on the table? Or listens with a half-perched ear as they respond to the email that just popped up on their laptop? Is the double dipping of time more productive, or creating a disruption in our ability to concentrate on the task at hand? Could we be the creators of our own oxymoron story by thoughtfully creating fulfilling roles, but making the workplace a dopamine-seeking society that makes one seek more, even when fulfillment is in their grasp? Creating A Truly Dope Place to Work Human Resource professionals have the arduous task of finding and retaining talent. As more employees enter the workplace looking for a career that fulfills an internal purpose, it’s not far-fetched to see talent leave because they just don’t find the work personally fulfilling. It’s time to evaluate if we are arbitrarily creating an environment that dopes employees into wanting more, over just creating a dope place to work. Some things to consider along the way: Make meetings phone and laptop free zones. Think: Does everyone need to be on that email? How about stopping by and having a conversation instead of the internal instant message? Is your training and development environment equipped to fire off the dopamine that spawns the desire to learn more? By creating a people-centric, collaborative learning environment, employees will surely feel that they’ve found the dope place to work. If you’d like to share how you’ve created a dope place to work, we’d love to hear from you! Share your thoughts in the comments below.

Harnessing Your Knowledge Potential

Darryl Williamson
DarrylWilliamson
Product Director
BST Global
I have spoken in detail with dozens of architectural and engineering consultancies over the past several years about their desire to harness the vast knowledge resident in their firms. For most of them, knowledge management is a very high management priority. And no wonder, since the A/E industry is confronted with ever-changing regulatory requirements, global competitive pressures, and the need to adapt to rising client expectations. Business thought leader Arie de Geus succinctly summarizes the great necessity in today’s A/E marketplace as: “The ability to learn faster than your competitors may be your only sustainable competitive advantage.” So then, how do you learn well as an organization? The most common response to satisfy this knowledge management need is to buy a tool or technology that can help gather and categorize your organization’s collective knowledge, thereby making it accessible and easy to leverage. Seems logical. But, purchasing a software package and expecting it to solve your knowledge problems by its mere presence just does not work. You will not become a highly effective knowledge organization simply by completing a purchase order. Over my next few posts, I will explain that leveraging the knowledge in your firm is not achieved at all by technology, but by a culture that meaningfully connects people. And, since I do not want to expose a problem and not solve it, I’ll provide insights into how you can achieve this in your firm. What is knowledge management? But, before I talk about the place and power of culture in an organization, in this post let’s take a step back and clarify what we mean by knowledge management and how it fits into the A/E industry. An intuitive way to think about knowledge management is to think about how we acquire and use knowledge personally. How do you come to know things? Well, you have experiences and you store them (learn), so you can recall or access them later (remember). What you learn and remember is what you know. Knowledge management is the same thing for organizations, it is processes for retaining, accessing, and interacting with what an organization knows. What defines knowledge in A/E firms? For A/E firms, knowledge can be broken down into three main categories: Qualifications: Including things like the educational background of employees, their certifications, and other credentials that convey to your current or potential clients that your firm has the knowledge to do the work you are promising. This is one of the essential elements of a project proposal, identifying the qualifications (requisite knowledge) of resources who would work on prospective projects. Work Experience: This serves as proof that your firm has relevant work history to complete the kinds of projects you are promising and that you have resources who have successfully worked on those projects. Work experience validates your qualifications. Moreover, work experience helps your management to know what work your firm does effectively (e.g. what work do we perform profitably and with few defects)? In other words, how did you perform on your projects? Practices: These are the methods and practices employed on your projects, and how those methods impact project success. Accessing these practices ensures that you consistently execute projects with the same level of knowledge and capability. Where does knowledge management fit in with my business? All A/E firms are obsessively focused on three things: money, clients, and employees. And rightly so, these are the pillars of a consultancy. Because of their importance, each of these are professional disciplines (i.e. accounting and finance, sales and marketing, and human capital management). Moreover, you have professional investments in these areas: you have leadership (CFO, CMO, CHRO), and you have business solutions in place for each (ERP, CRM, HCM systems). For the A/E firm, knowledge management must become another area of obsessive focus, and a fourth pillar. Knowledge management should be elevated to the same priority as all the critical processes in your firm, because for firms whose business is literally their knowledge, knowledge management is a critical process. Every time you engage with a client, your knowledge and experience fuel everything, from the renderings and documentation you create, to the projects you execute. You must have intentionality around knowledge. You need someone to lead it, and you need solutions to help you execute it. Follow along in the coming weeks as I dive deeper into the importance of knowledge management, and how you can successfully implement a knowledge strategy at your firm by developing an effective knowledge culture. Author’s Note: This is the first in a series on knowledge management as it relates to the architecture, engineering, and environmental consulting industry.

Move Over Millennials, Introducing Generation Z

Evelyn March
EvelynMarch
Group Director
BST Global
Just when you learned to spell Millennials without a spellchecker, there's a new group emerging and entering the marketplace: Generation Z. Also known as Post-Millennials, the iGeneration, Founders, Plurals, or the Homeland Generation. While the definitive date of when this group starts is still up for debate, the litmus test is if they can clearly remember where they were on 9/11. If they're too young to remember – they're a Gen Z-er. This group is growing up in a time where terrorism is a reality, they have felt the effects of a global recession and the debate over climate change is all they have known. Their households, neighborhoods, and friend list is as varied as Joseph's Technicolor Dreamcoat. What they define as normal is more diversified than any generation before. And they will be the workers of the future – the near future. As the trickle of Baby Boomers retiring continues, the emerging presence of Generation Z will begin to flood the market. So, what does that mean for employers? Forget the textbook answers Every generation wants to inspire the next to do and be more. Baby Boomers taught their Gen X children to go to college, learn more, and thus earn more. With age and education came wisdom. Generation Z will call that passé. Generation Z are privy to much more information at a younger age. Their porthole into the world is often exposed before they're introduced to formal education. Tablets, smartphones, laptops, television, videos, and wearable electronics are piping data into their brains making them historians far beyond textbook knowledge. The qualifier for knowledge of yesteryear may not work in the future market. Global yet local If there was one word to sum up the Gen Z approach to life, it would be hypersensitive. Living in an era where 77% of the generation have internet access, they are enlightened to global events. Whether the event is global warming or terrorism, they understand the actions abroad and they are well versed in the needs and attributes of their local environment. Where there was a desire to go forth and conquer in previous generations, Gen Z will want to stay close to home, yet have a global impact in their careers. In short, they're ready to change the world. Pluralists Historically, diversity has been defined based on ethnicity and gender. However, this Pluralist Generation challenges conventional wisdom as they accept and experience diversity on a micro level. Mixed race, single-sex households, and diverse religious affiliations are standard to them and expected in a single society. Because of their progressive acceptance, a new expectation of diversity will emerge. The Pluralist Generation will push for and expect micro diversity from their future employers. Re-education Ten percent of the apps on the Apple store are geared toward Generation Z. Re-education is essential to their wellbeing. They have an endless capacity to seek and retain data – that quest will not end after they receive their first paycheck. If your training and learning environment isn't continuously creating micro-learning opportunities, you may experience a revolving door of bored Generation Z employees. It's clear that this new generation will change the prototype of employee engagement. Shaped by technology, history, and economics we will soon employ a generation with unprecedented attributes. Are you ready? We'd love to hear how you're redefining your workplace for the generations here today and those expected tomorrow.

First Comes Diversity, Then Comes Inclusion

Evelyn March
EvelynMarch
Group Director
BST Global
In our micro-diverse society, many companies strive to mirror their peers, their clients, and the world at large. Creating a diverse work environment hones in on the cultural mix of experiences and acumens that team members bring. But after you've onboard this diverse community of talents, then what? The path to excellence I'm sure we all have a former teacher that made a statement that gave us an aha moment. Mine was my high school English teacher who memorably said 'Coming together is a beginning; keeping together is progress; working together is success.' That quote sums up the path to excellence and defines inclusion. Good companies market diversity and inclusion, great companies create a competitive edge by decoupling and then living the two. After bringing together a diverse staff, a company must define inclusion to forge the path to excellence. What's the difference? Inclusion integrated the myriad of individuals into one workplace – seamlessly and individually. Why is inclusion so important? People from diverse backgrounds challenge each other more. Challenge begets creativity. Creativity begets profitability. Getting it right first with diversity allows a company to peel back the corners of the world and how it may interact with your product through the eyes of your employees. Inclusive workplaces that create forums for individual contribution outperform competition and enjoy longer employee retention. The generations entering the workforce are raised believing it's unnecessary to downplay their differences in order to get ahead. They are proud of their differences and refuse to check them at the door. A Deloitte survey revealed that 86% of Millennials feel that differences of opinion allow teams to excel. Moreover, lack of inclusion can lead to a lack of engagement. And that affects a company's bottom line as disengaged employees cost companies up to $350 billion per year in lost productivity. Inclusion requires planning For many, inclusion is synonymous with chaos. But, it doesn't have to be. A forum for employee collaboration does require commitment and planning, but the reward is worth the investment. Align each position with the company's success. Every team member is essential. Understand where their insight is paramount and create the forum to extract their feedback. Create model leadership. Train your leaders to model ethical behavior. Accept input, admit mistakes, and express genuine concern for all staff members. Redefine ethics. Is your code of ethics a statement you expect from your employees or does it define what your employees can expect from you? Inclusion views ethics as bi-directional. Commit to training. First management, then employees. A corporate culture that creates standards on how to raise issues and resolve them and the consequences for deviation are setting themselves up for successful inclusion. If you're desiring the mix of employee engagement, reduced turnover, a clear picture on global outreach and increased profits – understanding your stance on inclusion may be your answer. Where do you stand on your inclusion policy? Let us know in a comment below.

Systems Integration Planning: Plan Twice, Cut Once

Eddie Shasek
EddieShasek
Project Director
BST Global
Have you ever felt like you are swimming in a pool of sharks? Take back control of your software integration project and feel like the customer again. It is a disadvantaged position to be reviewing a project plan from your software vendors trying to look for savings without being really sure if the cuts you are making are actually trimming fat, introducing risk, or destroying future shareholder value.  Below are some things to think about when reviewing a plan and deciding if it will bring value to your organization beyond the basics of software integration. Not all projects are created equal. The shortest and least expensive plan often has unexpected costs that accumulate well into the future in the form of rework and possibly re-implementation, depending on the severity of the oversight created in an overly accelerated process. Gaining upper management’s support with a short-sighted or smaller estimate may make it much more difficult and possibly painful to expand the plan and cost expectations later in the project when additional needs or risks are discovered. In addition to the unanticipated hard costs that could surface later, an under-developed implementation plan can also result in very damaging soft costs after go-live. A poorly planned project can result in attrition of employees, dislike of the new software, and loss of confidence in leadership at the front lines. To avoid these pitfalls, think about the following points when evaluating the integration project plan from your external software providers, consultants, or hired gun project managers: Does the plan allow time for data clean up? If the project is part of an acquisition, there is often overlap across the two companies of client and vendor data. Avoid Data Duplication - Data duplication can leave you with a messy system and diluted reporting. Set Boundaries and Ownership – If mergers are involved, the two companies could have worked together previously in a sub-consultant relationship. There could even be employee overlap in the data. Take action early - Data should be cleaned up ahead of any integration. Make a choice - What system is the master for duplicate data? Again in acquisition projects, allow time for process adjustments. How will you clarify processes to avoid marketing to same prospects, and maintain one face to common clients? Is there a clear milestone in the plan marking the end of configuration decision making? This allows for a stable system during data migration and process testing prior to training. Is the training within 30 days of the live date? Earlier trained knowledge will fade in your staff if it is not reinforced with use within 30 days. Have your payroll cycles been considered when scheduling the go-live date? Has the go-live been planned on a Year End? Year End is typically not a good time to open a new system due to accounting staff overload. Has a project governance process been established to ensure that the initial version of the joint system is not overly customized and that the implementation team is accountable to the milestones in the plan? Integration time is also a great opportunity to refresh and expand the knowledge of the existing staff alongside the initial training of the people who are new to the system. Leveraging internal experienced users for new user training to reduce consulting cost, and will help strengthen and expand the knowledge of experienced users.   Do you have an industry standardization M&A success story? Let us know in a comment below.

Creating a Culture Mix of Extrinsic and Intrinsic Motivation – And Who is Responsible?

Evelyn March
EvelynMarch
Group Director
BST Global
Let’s face it, there are countless articles in print and cyberspace that gives insight to the growing concern of tenure and turn-over. So, what really motivates employees to stay? Companies are adopting and promoting their extrinsic rewards as a reason to ‘work here’. Great pay, great healthcare, flexible spending accounts. Some companies have expanded their offerings to perks like gourmet meals, endless snacks, and on-site baristas. The package of extrinsic tangible rewards are appreciable motivators. However, even with such great extrinsic motivators, companies like Google are still experiencing a high level of turnover. A survey on employee tenure for the companies on the Fortune 500 list showed Google at number 462 with an average tenure of 1.1 years. On the other side, an article in Business Management Daily featured Synergis Technologies and its 108 employees have been with the organization for an average of 10 years. What’s the secret ingredient in Synergis’ secret sauce? The company’s core value mantra includes innovation. Employee innovation that is. The intangible intrinsic motivation of creative contribution is what makes it a bit harder to part ways. Who moved the cheese? Years ago when industrialization had taken the world by storm, work was primarily routine and guided by policy and procedure. Under that model, the extrinsic reward system were the motivators of the times. Today’s workforce is asked to employ critical thinking and problem solving in their daily tasks. These scenarios are not easily definable in a written manual. The freedom to express one’s creativity – that will in turn catapult the company in the marketplace – is a healthy, highly rewarding intrinsic motivator. With this change in landscape, it is imperative to see that extrinsic and intrinsic motivations are dually important in achieving successful employee engagement. Who's on first? Reading from a tattered corporate playbook, Human Resources is usually the kicker pulled off the bench to score the extra three points that scores the win for employee engagement. Though excellent in developing the extrinsic reward program, are they the best players to develop the intrinsic motivators required to keep employees engaged? Reviewing several companies studying the other side of the coin, they decided the answer is no. While invested in providing the talent for the company, they’re not necessarily engaged in the intricate details of the delivered product. The group that has come to the rescue is marketing. The marketing team is responsible for understanding what your customer needs, and why you and your product are the best choice to fulfill. Creating a two-way branding schema strengthens the allure of the company’s brand to both the receiver and deliverer. Do your employees really know what you do? Quality Bicycle Products, a Minneapolis company dedicated to bringing innovative ideas to the biking community understood that it was important to align the internal and external messaging of its values.  To foster the idea that we need to change our environmental footprint to its 185 employees, QBP offers a $2 per day credit to employees living within ten miles who choose to bike, bus or carpool to work. The marketing of an eco-friendly alternative to transportation was also marketed internally. Employees now feel that they are the greatest contributors to the company’s sustainability endeavors. Nike is best known the slogan ‘Just Do It’. Consuming their brand gives you the power to persevere. Whether you’re a cashier or an engineer, your intrinsic motivation to deliver that message is conveyed through corporate storytellers that act as internal marketers. Its rich heritage is conveyed through the stories of how Coach Bowerman created better running shoes for his team by pouring rubber into the family waffle iron, and that was the birthplace of the iconic Nike waffle sole. These stories of innovation provide archetypes that employees can pull from to create their own motivation toward greatness. These are just a few. Others like Starbucks, Disney, and IBM have great stories around creating intrinsic motivation by including the external branding to the internal teams. Creating a Success Story Balancing the two motivators is really about timing. Intrinsic motivation is inspired, not taught.  During the onboarding, introducing your product to your employee as you would your customer excites the intrinsic mind to work toward achieving a purpose. Continual sensory feeding is necessary to reignite the motivated employee. As you change your branding strategy are your employees engaged? Are they invested in the latest and the greatest that the outside world sees? When logos change and branding changes, are the employees also engaged in experiencing the change?  Are you taking full advantage of your extrinsic and intrinsic reward system to create the best employee experience? What motivators do you use at your firm? Tell us more in a comment below!

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