Part 1 of this case history showed how this small landscape architecture firm in Nebraska employs sustainable business principles to reduce operating costs in its business.
From the beginning BMW adopted a highly disciplined approach to the financial management of its projects. The project manager for each project is involved in the process of establishing a project budget and all staff understand that they will be held accountable for performing to the standards, goals and objectives established for them. CEO John Royster is firmly convinced that a firm, but fair, system for measuring employee productivity is consistent with the firm’s philosophy to make the most efficient use of the professionals it employs, which are after all the firm’s primary assets.
To this end, Royster and his partner Katie Blesener have established an unusual system for evaluating the productivity of each individual staff member. The project budgeting and management system allows each person’s hours to be tracked to either individual projects (billable) or to marketing or administrative duties (unbillable). BMW understands very clearly the ratio of billable to unbillable hours it must achieve to maintain a satisfactory level of profitability. A well-tested formula, completely transparent to all staff, allows the firm to establish base salaries and raises on how well individuals perform to the budgeted billable hour percentages.
Again, this is an unusually rigorous approach for a small firm and Royster has found that some employees have not responded well to having their activities quantified and measured in this fashion. He “sells” it to his associates, not by preaching the gospel of company profitability and returns to shareholders, but rather by making it clear that the system ensures success, not only in terms of customer satisfaction, but also in terms of the stability of BMW’s financial position, which in turn protects the security of employees’ jobs. Over the years his best staff have understood this message, learned how to become more productive in the way they work, and reaped appropriate personal financial rewards.
At the same time, the company believes firmly in investing in the skills and capabilities of its people. Every staff member is required to have an ongoing professional development plan (PDP), and is allowed a few hours of non-billable work time to establish and update it periodically. The PDP provides the basis on which the company pays for all relevant professional membership dues and for 40 – 60 hours per year of continuing education for each person. Staff are encouraged to engage with and support community activities that are relevant to the firm’s business. BMW also pays the full cost of a health care plan for all staff.
Royster likes to say that he and his staff have a “we can save the world, one project at a time” attitude. The firm’s values are communicated unambiguously to potential employees. One recent advertisement for a new professional stated: “Respecting and celebrating local culture, natural ecosystems and client needs are core values of our firm.” It has worked hard to provide staff – its human resources – with professionally satisfying work, a demanding yet rewarding work environment, a corporate mission that appeals to their personal values, competitive salaries and benefits, and an opportunity for professional development.
To couch it in simple financial terms, this type of commitment to building a culture that maximizes the value generated by a firm’s human assets is a key element of any genuinely sustainable business strategy. However, the obvious benefits of this type of strategy frequently get overlooked or even ignored – even in companies that pride themselves on their sustainable practices – amid all the noise about energy efficiency, reduced water consumption, waste minimization, green building and other aspects of “hard” resource efficiency. After all, a significant proportion of companies in the SME economy are professional service firms in which by far the most important assets are their people.
It is certainly not easy to quantify the economic benefits of building a sustainable human culture in a business. Plenty of studies, however, show that motivated employees who feel they are fairly treated, enjoy their work environment and appreciate what the firm stands for in its approach to customers, the community in which it works and the natural environment, are not only more productive in their work but remain with the firm over a long period. This last is very significant in financial terms because the cost of finding, hiring and training professional staff like those at BMW is considerable. Royster estimates it costs $5-10,000 to bring a professional into his firm and takes at least a year to bring him/her to full productivity. Using the productivity model described earlier, he reckons the firm is “lucky to break even” on someone in their first year. BMW does not suffer much from this problem: all of its small staff have been with the firm for several years, the longest and most senior over 14.
In Part 3 next week we’ll show how environmental challenges in Nebraska have enabled BMW to increase its revenues by expanding the range of services it provides to customers.