5 Business Development Goals for 2012

Will 2012 be the start of the long-awaited economic turnaround? The signs are encouraging, but we heard similar optimism this time last year. Yet many A/E firms have good reason to be hopeful, as their business prospects have already taken a significant upward turn.

However, the outlook for firms that largely serve state and local governments is less rosy, to be sure. Budget cuts at the state and local levels are projected to increase by 40% in fiscal 2012, according to one analysis. Federal infrastructure spending is expected to increase this coming year, but many firms will experience the opposite effect as the stimulus and base realignment programs wind down.

In any case, it's a good time to reevaluate your business development process. From my perspective, most A/E firms continue to do business development as usual despite dramatic shifts in the marketplace resulting from the financial crisis. Here are five valuable changes to consider in 2012:

1. Look deeper into clients' evolving needs. Over the past two years I've interviewed many of my clients' clients and I've seen a couple of important trends emerge from those conversations: (1) their needs have changed dramatically (or at least their ability to meet those needs financially) and (2) their A/E service providers are talking to them less since project funding has declined.

There's your golden opportunity--emerging, unmet needs and fewer competitors vying to meet them. I know, there's that little detail about their having little money to spend on A/E services. But even if the investment of your time with clients doesn't yield a short-term return, it may well pay generous dividends down the road. At the very least, don't ignore your own clients. Some of them are getting more attention from your competitors, the impact of which will be felt once the money starts flowing again.

But even if you're talking with clients, you may be overlooking opportunities to help. Besides the constraint of limited budgets, these emerging needs (financial, operational, planning, etc.) may not match your normal scope of services. It's time to get creative. Consider ways to repackage your services to better fit clients' needs. Partner with other experts where needed. Explore different models for compensation.

2. Systematize relationship building. Everyone in this business seems to understand the crucial value of relationships in building successful, sustainable companies. But surprisingly few firms have adopted a formal, consistent approach to initiating and maintaining these relationships. Firms that have relational BD strategies and key account programs in place can dramatically increase sales success, client retention, profit, and revenue growth.

Start this effort in the sales prospecting stage, with a shift from merely chasing projects to identifying clients with long-term relationship potential (or more likely, some combination of the two). Determine the traits that define desirable clients and screen prospects accordingly. Then follow a sales process that is more relational than transactional in nature, with an emphasis on serving rather than selling.

For existing clients, implement some kind of key account program if you haven't already. Or strengthen the one you have in place. At a minimum, this should include the top 20% or so of your clients that produce 80% of your revenue (if the proportion is much less than 20%, then you really need to be doing this!). You might consider determining where in the "client relationship life cycle" each of your significant clients sit, and define an action plan for each to try to move them to the next level.

3. Commit to never wasting a client's time. Most of what is done during the sales stage is decidedly skewed toward the seller's interest rather than the buyer. We all recognize this when we're in the buyer's role, but somehow become desensitized to it when thrust into the sales role. By default, we tend to act like salespeople, adopting some of the very practices and motivations we detest as buyers.

Enough! The best way to distinguish your firm during the sales process is not by selling, but by serving. This includes avoiding the usual self-serving sales calls that offer little of value to clients. I advocate never making a sales call without presenting your "entree," something of value (usually specific information or advice) in exchange for the client's time. Strive to consistently apply the Golden Rule to how you conduct the sales process.

4. Step up your marketing. In the mad rush to embrace social media, A/E firms have largely overlooked what makes social media work--valuable content. Simply having "access" via the internet means little if you don't have something to garner the attention and interest of a devoted audience. That's why, if you're like the average firm in our business, your marketing plan for 2012 needs to describe how you are going to substantially improve your creation and use of content.

You'll see this trend reflected in the top marketing tactics identified by a consensus of several recent studies. Assess your own marketing strategy relative to these tactics and determine how to improve significantly in at least a few of these this coming year. Your biggest challenge will probably be generating enough good content to support these tactics. This earlier post offers some suggestions; use the adjoining search bar to look for ideas relative to specific tactics.

5. Do fewer, better proposals. The first part of this advice may not apply to your firm, but most firms, in my experience, would benefit by being more disciplined in which proposal opportunities they pursue. The volume approach practiced by many A/E firms clearly doesn't work. It reduces the win rate and drains valuable staff time from more productive BD activities. This previous post describes some steps for reining in the "proposal monster."

Every firm can do better proposals and, to be frank, most are quite mediocre at it. Of course, the best way to improve your chances is to position your firm with the client before the RFP comes out. Then there are two ways that stand out in distinguishing your proposal from virtually everyone else's--(1) making it truly client focused and (2) designing it to be skimmable. The latter assumes that what's skimmable is at a minimum your proposal's core theme and key messages. Again, I've written much more on this topic that you can locate by using the search bar.

So, five business development goals for 2012 that every firm should find applicable--and valuable. Whatever your firm's prospects are for the coming year, these are ripe opportunities to get the jump on the competition and enhance your success in the new year.

Connecting the Team to the Client

For the project team to achieve maximum performance, every member should feel he or she is working directly for the client. This connects the employee to the firm's mission, which is to serve clients, not the project manager. Studies in a variety of industries indicate that team performance improves when team members feel a direct connection to the customer. And my own experiences as a manager and consultant bear this out.

If you are a PM, you likely are the firm's best source of information about the clients whose projects you lead. That means you assume responsibility for creating at least a vicarious connection between your team and the client through open and frequent communication. Some keys for making this happen:

Help the team understand both the project and the client. Project team members should have a sense of what the client is like on a personal basis. What motivates him, what constitutes a win for him, what are his biases, what are his hot buttons, what kind of personality does he have? This puts a face on the client, which can make a huge difference in drawing out the service orientation of the team.

Provide the context for all individual assignments. Teams perform more effectively when everyone can see the big picture and how their individual efforts contribute to the whole. Understanding the context of their respective responsibilities better enables team members to add value to their work. Given limited instructions, the worker can only do what he or she was directed to do. But with a broader perspective of the project, client, and other team member roles, that same worker is better equipped to find ways to enhance his or her contribution.

Keep team members informed of progress, changes, and client feedback. As crucial as it is to provide clear direction at the start of the project or individual assignment, it is equally important to keep the team up to date throughout the project. This acknowledges the reality of the dynamic, evolving relationship you typically have with clients, with expectations and demands subject to change as new situations and information develop. You should fully engage the team in responding to such changes. Any feedback from the client, especially that regarding team performance, should also be promptly passed on to the team.

Top 10 Blog Posts of 2011

Sometimes keeping this blog going is a chore. Like recently, when I've been so busy that I just couldn't keep my commitment to post weekly. I understand why so many fellow bloggers have let their blogs atrophy in recent months.

But then I get a few reminders that some people do value what I share in this space. Like being awarded the Golden Valuable Content Award for 2011 by a panel of British marketing consultants. Or the Google Analytics reports indicating that readership continues to climb. Or the periodic thanks from readers who appreciate my attempts at posting helpful content.

So I'll keep at it, and my workload is settling down such that I should be able to resume my regular weekly schedule. But alas, rather than posting something new today, this is the time of year when I recognize the most popular posts over the past 12 months. Perhaps you missed some of them, or may even find it worthwhile to read them again.

1. 10 Top Tips on ... Leadership. No business advice is in more demand than how to be a better leader. It's no simple role, but that doesn't prevent me from trying to compress everything I've learned about leadership into just ten tips. Do these few things well and I'm confident you'll experience greater success as a leader.

2. What Is Your Proposal's Core Theme? The best proposals have a story to tell. That's the proposal theme, a central narrative that presents the key benefits your firm has to offer. You'll be hard pressed to discern a theme in most technical service proposals. That's your opportunity!

3. Does Service Excellence Pay? The feedback suggest that A/E firms generally fall short of delivering great service to their clients. So is it worth the extra effort to try to out-serve your competition? The research indicates the answer is a resounding yes.

4. Why Employees Leave. The economy has slowed voluntary turnover. But as business improves, the talent shortage in our industry will be evident again and employee retention will be paramount. You should be aware of what the research says about why employees leave.

5. Assessing Your Firm's Culture. Corporate culture exerts a powerful influence on how things get done within your firm. Ignore it at your peril, especially if you're looking to change and grow. Here's a relatively simple template to evaluate your firm's culture.

6. Taming the Proposal Monster. Most A/E firms submit (and lose) too many proposals. The economy has only made this condition worse. Your business development resources are too valuable to waste on excessive losing proposal efforts.

7. Why Incentives Don't Work. Most attempts to motivate better employee performance in our business are misguided. Traditional "incentives" have been shown in several studies to be ineffective in affecting behavior. This post, and the associated video, explain why.

8. Fortifying Your Firm's "Strategic Foundations." Culture, values, mission, and vision are generally undervalued. Most firm leaders consider these important to have, but rarely name them among their most strategic assets. But the research indicates otherwise. Some key questions to ask.

9. Why Technical Professionals Aren't Persuasive. Everyone has to sell something to succeed in business and life. But technical professionals seem particularly challenged to be persuasive. This post offers reasons why. You might also be interested in how to be more persuasive.

10. Preparing for Another Possible Downturn. As noted in the introduction, I tend reserve my optimism for what improvements firms can make themselves versus what the market forecasts indicate. This post offers several ideas for strengthening your firm's market position regardless of whether external conditions take a positive turn or not.

Strategies for Building Collaboration

My first real post in this space, in June 2008, was entitled "Collaboration as Competitive Advantage." I posited that most firms in our industry had not mastered collaboration across disciplines and with outside parties. One piece of evidence: High rework rates that would spell disaster in most businesses. I felt strongly then, and still do, that someone could capitalize on this shortcoming and market an effective collaborative approach as a distinctive, high-value offering to clients.

I was reminded of this as I prepared to work with still another client struggling with poor coordination, communication, and alignment between different corporate functions. I will be doing some training for this client on the "skills for collaborative success," which provides a convenient excuse to write about it here.

A simple definition of collaboration is "collective effort to achieve mutual objectives." But true collaboration involves more than simply working together with others to accomplish common goals. The principle of synergy should apply, where collaboration enables people to achieve substantially more together than the sum of their individual efforts.

The A/E industry is increasingly moving toward more collaborative project delivery processes. One example is the growth of design-build. The next wave may be Integrated Project Delivery. These approaches hold great promise for providing better solutions to our clients in less time and at lower cost. But before we can excel at collaboration with outside parties I suggest we need figure out how to do it better internally.

In either case, here are some recommendations for strengthening your competency at collaboration:

Align performance goals. Different members of a team often have different, even competing, goals for the same project. So your first step is to bring some alignment to the team's goals. Start by identifying common objectives that everyone can agree upon (e.g., meeting client requirements). Then work outward, first with goals where there is minimal difference (or perhaps simply different perceptions), moving toward those that are less aligned. In some cases, complete alignment may not be possible, but you should at least determine how such differences can be accommodated. Eliminate as many conflicting goals as possible.

Define steps for maintaining open communication. One of the biggest mistakes in this area is to assume adequate communication will take place without giving it specific attention. It's best to try to schedule all routine communications so that a discipline can be developed around this activity. Then identify situations or milestones that trigger the need for additional communication. Mutually define individual or group preferences for communication (e.g., email or phone, time of day, how discussions will be documented).

Clarify roles and responsibilities. People who regularly work together often assume they know who's responsible for what when, in fact, it hasn't been clearly established. I've worked with different departments within a firm, with clients and consultants who've worked together for years, and design-build teams that have completed previous projects together--and have consistently found gaps in understanding roles and responsibilities. If your team has never reviewed this in detail, let me advise you to do so.

Agree on lines of authority and the approach to decision making. Combining teams of different departments or different firms sometimes leaves questions about who has authority in various scenarios. If there is a design change, who precisely needs to buy off on that? If you're communicating with the media or the public on behalf of the project, whose approval is needed? Clarity on decision making is important, of course, not just in terms of who's involved, but how and when decisions can be made in timely fashion to avoid delays or interruptions.

Commit to resolving conflicts promptly. Differences are one of the qualities that make teams strong. But differences can lead to conflict, which if left unresolved, can erode trust, productivity, and collaborative success. When conflict inevitably arises, start by trying to understand each party's position, needs, and motivations. Be sensitive to the emotional context, trying to depersonalize the disagreement as much as possible. Before compromising between the two positions (which equates to a partial defeat for both sides), seek a satisfactory third alternative. Engage a third party to mediate if necessary.

Celebrate mutual successes together. Be sure to acknowledge and celebrate meeting collective goals. As they say in sports, winning is the best way to overcome differences and struggles among teammates. Plus celebrating success provides positive reinforcement for doing things the right way.

Conducting Project Debriefings

I can imagine readership dropping off some this week. Conducting project debriefings is hardly a sexy topic. A Google search on the subject, not surprisingly, turned up very little. Perhaps that's why they are alarmingly infrequent among most A/E firms.

But if your firm is committed to ongoing improvement, regular project debriefings are a must. The basic process is pretty simple: The project team meets to answer two important questions: (1) How did we do? and (2) What can we do better next time? Typically, this occurs at the end of a project, but on larger projects you will do well to conduct interim debriefings at key milestones.

Here are some guidelines for making these sessions productive:

Keep the tone of the review positive. The primary goal of the debriefing is to define work process improvements. While you will obviously need to discuss problems and issues, you want to avoid criticism and placing blame. If things went poorly, some people may want to use the session to air their gripes. But remind them that everything said must be constructive. That means no personal attacks or dwelling on what went wrong. Encourage critics and complainers to turn their attention to finding solutions.

Consider having an outside party facilitate the debriefing. Someone who had little or no involvement in the project is often more effective in pointing to the root of problems and guiding the team to better remedies. This person can look at issues more objectively and ask probing questions from a more detached, outsider's perspective. For larger projects, you might want to have a panel of outsiders guide the review and offer additional recommendations for improvement.

Make sure everyone is heard. Sometimes production staff and junior professionals are reluctant to speak out in these meetings, especially in the presence of senior managers. As facilitator, you want to stress that everyone's perspective is important because everyone contributes to the project's success. Try to create a "safe" environment where everyone's input is valued. Production staff often have a substantially different view of things, which can be helpful in designing process improvements that will work. If you cannot get certain team members to open up during the debriefing meeting, seek their feedback privately.

Consider diagramming the work flow. Providing a visual representation of how work gets done can be quite useful in identifying existing inefficiencies and proposed improvements. In some cases, you may be surprised how little team members understand about the overall work flow. Once diagrammed, you can more easily uncover gaps, unnecessary steps, improper sequencing, and other process deficiencies. Hint: Work flow diagrams can be even more useful at the start of the project.

Assign responsibility for implementing changes. All too often, improvements identified in such debriefings don't get made because no one was specifically assigned the responsibility, tasks are ill defined, or deadlines are not given. Don't make the mistake of simply deciding what needs to be done; determine how it will be accomplished. Most work process changes ultimately involve multiple people, perhaps even the entire project team. Seek buy-in and commitments from the team before proceeding.

Of course, include feedback from the client. In making process improvements, you certainly want to consider client perceptions of how things went and what changes they'd like to see. For that reason, I advise getting such feedback in advance of your internal debriefing session. Client feedback is often a great motivator for getting the team to follow through on improvements.

Delivering Added Value

Delivering added value to your clients is the best way to differentiate your firm. That was the conclusion of a survey of over 5,000 buyers of A/E/C services who were asked which criteria they used most often to distinguish between similar firms. "Value for the dollar spent" was the top response.

While that survey was conducted a decade ago, there's no evidence that the results would be much different today, is there? If anything, the stagnant economy has increased the number of buyers looking for good value. Yeah, for many, better value means lower fees. But cost alone does not define value.

What is value? Here's my favorite definition: Value is the perceived benefit received, less the associated cost. Lowering the cost may increase the value of a product or service. But people have always been willing to pay more for greater benefit. If your firm is struggling with increased pricing pressures, you better start focusing on the benefit side of the equation.

Don't miss this important point: Value is a personal, subjective calculation. You can't quantify value simply by looking at purchase price, or some other tangible attribute. Value is derived from the "perceived benefit," and people's perceptions of value are widely divergent.

For ready evidence of this, check out eBay. A burnt piece of toast that with some imagination bore the image of President Obama commanded $205. That was a steal compared to the $28,000 someone paid for a grilled cheese sandwich that reputedly had the image of the Virgin Mary on it.

Among my favorites, custom air guitars selling for upwards of a hundred dollars. One customer posted this question on an internet forum: "I bought an air guitar on eBay for only $42.68. Did I get a good price or what?" "Depends on what model it is," came one response. Another added, "I'll sell you the matching amp for $50."

Okay, you get my point: Customers define value. And because value is personal and subjective, it is delivered in both tangible and intangible ways. Don't overlook this! Technical professionals often miss the subtleties of delivering intangible value. What's intangible? Perceptions, feelings, experiences, values. I know, you didn't sign up for this when you decided to become an engineer, architect, or scientist.

But if you want to add value to what you do, if you want more success as a business developer, if you want more client loyalty, you can't ignore the experiential product. Professional services are experienced, and clients place as much value on the experience as the expertise.

Determining how to add value involves analyzing the interplay between tangible and intangible benefits--and costs. For example:

• One solution may deliver better system performance (tangible benefit) but be more of a hassle to operate and maintain (intangible cost)

• Another solution may gain greater community acceptance (intangible benefit) but cost several thousand dollars more (tangible cost)

You can't deliver added value by simply providing better technical solutions. Value goes much deeper than the balance sheet or the spreadsheet alone.

With this in mind, what then is added value? Quite simply, when the client receives more benefit for the cost (tangible and intangible) than expected. Many firms make empty marketing claims of delivering added value without ever having defined it--or more importantly, without allowing their clients to define it. I know, I've asked for the evidence, both from A/E firms and their clients.

So let me challenge you to look deeper into your value proposition. Put it to the test. Ask clients for clarification. Package tangible and intangible benefits in your technical solutions. And maybe throw in an air guitar for extra measure. Who knows, your client might see it as added value.

Leading in Uncertain Times

Leadership has always been a critical differentiator in our business, but never more so than over the last three years. The lingering uncertainty from the worse financial collapse since the Great Depression will continue for the foreseeable future. So the need for effective leadership remains acute.

Not every A/E firm is struggling, of course. Some have had record years since the recession hit. Others have gone out of business. Some that have flourished through the worst of the recession may find the worst lies ahead in their core markets. Others will recover nicely.

The one constant in all the uncertainty is that strong leaders make a difference. And these times have added new challenges to the already daunting role of leader. Over the past three years, I've written several posts in this space offering my best leadership advice for these unique times. Since many firms are finalizing their plans for 2012 (not to mention the fact that I'm excessively busy right now), I thought it would be worthwhile to recycle some of my favorite related posts:

Recession Exit Strategies. Some general advice on navigating the persistent impacts of the "not-so-over" recession.

Now Is the Time to Increase Market Share. I wrote this in 2009, but it's still true today. Before the financial collapse, the A/E business was better than ever. Companies were growing because their markets were growing. Now if you're going to grow (apart from making an acquisition), you probably have to take market share from your competitors. Some suggestions on how.

Helping Clients Do More With Less. Have you been keeping in touch with those clients who can't afford to hire you lately? From talking to several such clients, I know some firms aren't doing a good job maintaining those relationships. Clients may have less money, but their needs haven't decreased. You may have a chance to fortify some of these client relationships for the long term.

A Cure for the Post-Recession Blues. I saw a fascinating statistic recently: 75% of departing employees would not recommend their former employers to friends and peers. Before the recession, the number was only 41%. Don't ignore morale in your office, especially if your firm has been weathering tough times. Here's how to help alleviate the stress.

Strangling the Golden Goose. Some firms just don't get it when it comes to improving performance. You don't want to let the strain of the economic downturn cause unnecessary strain in the office.

Keeping Morale Up in a Down Economy. Still more advice on maintaining a productive office environment when business gets difficult.

Letting People Go With Dignity. Thankfully, most of the recession-related layoffs seem to be behind us. But given the continued popularity of this post, there are obviously some still facing the unpleasant task of reducing staff. Bottom line, the responsibility to treat your employees right doesn't end with their employment.

Avoiding Cost Cutting Mistakes. Budgets are still tight in many A/E firms, and some are still facing cuts. This post encourages you to reconsider making some common but often misguided austerity decisions.

Management Communications in Tough Times. Communication from management to staff is always important, but especially so when business turns south. Here are some valuable tips to keep in mind.

Preparing for Another Possible Downturn. More suggestions for responding to potential declines in your core markets in the coming months. I posted this in September, but offer it again in case you missed it.

The Minimalist Marketer

British marketing consultant Sonja Jefferson somehow concluded that I was an effective marketer. She and her colleagues last year named me the inaugural recipient of the Valuable Content Award, based on the client-oriented content presented on my website and in this blog. Now she wants to interview me for an upcoming book on content marketing.

I'm honored, and a bit perplexed, by the attention. You see, I don't think I've been doing that great a job marketing my consulting practice. For example, check out Sonja's Twitter profile. She has over 2,200 followers while I have a measly 142. Only 21 people have "liked" my Facebook page. I've been sporadic lately in getting speaking engagements and articles published (the usual excuse--too busy).

Yet despite my shortcomings, I still have more of a web presence, publish more articles, and speak at more conferences than 90% of my clients. And most of them have dedicated marketing staff. More importantly, I attract more prospective clients through my marketing efforts than most of the engineering, architectural, and environmental firms I work for.

How can that be? I may be a minimalist marketer, but I focus my efforts on those activities that have have been shown to be the most effective. Last November, I posted in this space a summary of several studies that identified the best marketing tactics for professional service firms and other B2B enterprises. I identified eight marketing practices that stood out:

• Seminars and other in-person events
• Conference presentations
• Webinars
• Articles in third-party publications
• Search engine optimization
• Articles posted on your website
• PR pitches to journalists
• Email newsletter

Nearly all of my marketing efforts involve doing those things. Most A/E firms, by contrast, expend the bulk of their time and money on marketing tactics that haven't proven as effective--trade show exhibiting, direct mail, advertising, design competitions, self-promotional websites, and, of course, the usual collection of marketing collateral. That's not to say that these activities don't have value, but too many firms are shortchanging the more productive tactics.

If my supposed marketing prowess deserves anyone's attention, perhaps it is in this: If I can do it, certainly your firm can too! I'm a one-man consulting practice responsible for every aspect of running my business. Yet I still make time to post to my blog (most) every week, publish a monthly email newsletter, write several articles a year, speak at various conferences, conduct webinars, maintain a content-rich website, and dabble with social media. The result: 70% of my new clients come as a result of my marketing activities.

So if your firm is spending most of its marketing investment on activities that are not among those producing the best results, let me urge you to take the "minimalist marketing challenge." Commit to at least use the top tactics as much as I do. If I can do it, your firm certainly can. It might even get you noticed across the pond.

Getting to the Root of Problems, Part 2

One thing that fascinates me is how often problems persist in our business primarily because we simply fail to ask the right questions. This is a common shortcoming in our interactions with clients (for example, neglecting to ask about service expectations). The same oversight plagues our internal operations as well.

The most important question in both cases is, "Why?" When we understand the why we're in much better position to define the how. Yet we often shortcut the process, going to the how before we truly know the why behind a problem. That leads to a lot of ineffective solutions.

Last week I outlined the first steps in identifying the root cause of a problem. To clarify, a root cause is a factor that, once corrected, prevents the problem from recurring. Root cause analysis (RCA) can be broken down into three primary steps: (1) defining the problem, (2) determining why it happened, and (3) developing steps to prevent it from happening again.

In the previous post, I introduced the Fishbone Diagram, which can be a helpful tool in identifying probable causes of a problem. This step will likely produce several probable causes, but not all of those will qualify as root causes. This is an important distinction to make. Problem solving often falls short because the solution targets causes that are not root causes. In fact, the supposed causes may not be causes at all.

For example, consider the problem I suggested in the last post: PMs who fail to make the expected contribution to the firm's sales efforts. A couple of the supposed causes identified using the Fishbone Analysis were:

• PMs don't have time due to the pressure to meet utilization goals. I often hear this reason given for poor sales efforts. But then I learn that these same individuals have actual utilization rates of 60-70%. So the question is, how are they using the other 30-40%? Cannot a portion of this be devoted to business development? This matter frequently turns out to be more an excuse than a cause.

• PMs don't have the personality to sell. This is another common reason given that doesn't quite hold up to scrutiny. There is abundant research that disproves the notion that selling ability is attributed to certain personality types. On the contrary, studies indicate that people of all personality types can succeed at sales. It's a matter of desire, commitment, and fitting the approach to your strengths. Once again, this appears to be a convenient excuse, not a root cause.

So how do you get to the root cause? Dig deeper into to the question of why. A useful method for doing this is called the Five Whys. Here is the basic process:

• Having identified a probable cause, ask the question: "Why did this happen?"

• Then repeat the same question for whatever your answer is to the first question.

• Continue to ask why for each answer until you can no longer answer the question. Experience shows that usually five times is adequate, but it may take more or fewer iterations. When you can go no further with this exercise, you've probably uncovered a root cause.

• There may be more than one root cause. Each probable cause that you select from the Fishbone Analysis could potentially yield a different root cause. But more likely, you'll find them converging as you go through the Five Whys.

Now let's apply this approach to our hypothetical situation:

• Why are our PMs not fulfilling their sales responsibilities? Because they don't have time given the pressure to be billable.

• But the data don't back that up. Why are they saying they don't have time? Because they perceive that their other responsibilities are a higher priority.

• But that's certainly not what we have communicated to them. Why do they not consider business development a high priority? Because we place more emphasis on other metrics. There are consequences related to making budgets or satisfying clients, but none really related to making the expected sales calls.

• If business development is critical, then why aren't we giving appropriate priority to meeting those metrics? Because historically we've gotten by with the principals doing the bulk of the business development. That's no longer adequate.

What we've learned in this exercise is that the problem is largely cultural. It's not really a workload or billability issue as much as a matter of historic priorities. PMs in this firm have long been conditioned to think that their sales responsibilities were largely limited to keeping clients happy and supporting proposal efforts. The principals did the heavy lifting.

Now as market growth has stalled and principals have become more involved in other aspects of running the business, they're expecting PMs to do more. But they haven't adequately changed how they reinforce behaviors related to business development.

The RCA approach, of course, could lead to other root causes in this scenario. But in most cases, they will similarly prove to be behavioral in nature. In our business, few root causes are truly related to process or equipment. It's people. The secret to closing the gap between a problem and a solution usually comes down to understanding how to motivate people to do the right thing.

For more on implementing people-driven solutions, type "positive reinforcement" into the search bar on the right. But before you worry about defining solutions, make sure you're addressing the right root causes.

Getting to the Root of Problems, Part 1

The CEO of a public utility company said something in an interview that has stuck with me over the years: "Problems are my friends." His point was that problems inspire solutions that fuel progress. As consultants and designers, problems also generate demand for our services.

But often problems are just problems. I've worked with A/E firms that have been wrestling with the same problems for years without real resolution. How can this be? A large part of it is the difficulty in changing organizational cultures and entrenched behaviors. Habits are hard to break.

Firm executives also frequently fail to address the root cause of problems. It's like mowing down dandelions in your yard; until you kill or remove the tap root, they keep coming back. The dysfunction in companies persists because well-intended solutions target symptoms rather than the underlying disease. If you have such problems in your firm, perhaps it's time to apply some root cause analysis (RCA).

RCA is simply a formal process for identifying and addressing the root causes of problems so that their recurrence can be prevented. Root causes are not always readily evident, so it takes some concerted effort to, well, root them out.

A lot of misguided corrective actions fail because the root of the problem is not adequately identified. For example, let's say that despite this tough economy your firm is struggling to get project managers out to sell. You define individual goals, organize weekly sales meetings, and step up the pressure on PMs to make their assigned sales calls. But selling activity increases little.

Many firms tackle this common problem by doing sales training. There is certainly value in training, but does it address the root cause? Probably not, because on the surface it would seem to be more an issue of motivation or availability than ability. The place to start to address this problem is to uncover why PMs aren't making more of an effort to generate new business.

A popular tool for conducting RCA is what's known as the Fishbone Diagram. This provides a quick visual representation of likely causes and their relatedness.


Here's how to use the Fishbone Diagram:

• This process is most effective with at least 2-3 people familiar with the problem.

• In the Effect box, write a brief description of the problem you're trying to solve.

• Write category titles for the four main branches of the diagram. You might choose the ones depicted above, as they are the most common: Equipment, People, Process, Culture.

• On the horizontal lines, write suspected causes within each applicable category. You are encouraged to draw angled lines for sub-causes (or the underlying "why"), when appropriate.

• Review the possible causes you've identified and select those few that most likely have a significant role in contributing to the problem. Important: Look for correlations between causes (in other words, causes that likely interacted with one another).

• You may want to subject each of the selected causes to further analysis, applying the "5 Whys" process, which I'll cover in my next post.

So let's imagine you applied this process in your firm, engaging your PMs in a non-confrontational way to try to understand why they aren't investing more of their time in business development. The following are some reasons you might uncover:

People: Busy with projects, don't really have the time; not comfortable with selling, doesn't fit their personality; haven't been very effective at it in the past; don't really know what to do beyond talking to existing clients and attending professional association meetings

Process: Performance metrics place far more emphasis on productivity, utilization seems to trump selling as a priority; firm doesn't do a good job identifying market opportunities and identifying new leads; difficult to get prospects to return phone calls; CRM system not capturing a good portion of the sales activity; too cumbersome, not remotely accessible when on the road

Culture: Doing the work has until recently been given higher priority than business development; the principals historically handled most of the sales responsibilities; not good at holding people accountable

This list of causes might seem a bit overwhelming at first. There's a lot to tackle here. But not all of these are root causes. Some are symptomatic of underlying factors. Some issues are more important to address than others. To condense the solution down to a more manageable--and effective--level, you need to dig deeper in uncovering root causes.

The next step is to look for correlations, grouping the various causes that are interrelated. In this case, some are readily evident:

• Productivity pressures. The firm understandably stresses the importance of meeting utilization goals. This is reflective of both the historic culture and the primary performance metrics. But the best solution for the current productivity struggles, of course, is increasing sales. Yet the firm seems to have inadvertently put these two objectives in conflict.

• Inadequate business development process. A/E firms often have a rather piecemeal approach to generating new business, and that seems evident here. PMs aren't clear about how to proceed, aren't sure what the market opportunities might be, need help identifying leads, find the CRM system more a burden than a help, and are unaccustomed to being counted on in a big way to generate sales from new clients. The overall BD process needs further refinement.
  

• Ineffective sales skills. There is also evidence that some training is probably warranted. The PMs indicate uncertainty about how to sell, and a corresponding lack of confidence. They don't seem to recognize their role in gathering market intelligence and uncovering sales leads. These issues can all be addressed through training and ongoing coaching.

By grouping the initial list of causes this way, the problem begins to look more manageable. But there's still need for further analysis. That will be the subject of next week's post.

More White Papers Worth Downloading

I like white papers. They're not as long and time-consuming as books. They provide more detailed information and how-to insights than the usual article. I've collected over 100 white papers in a folder on my hard drive, organized by subject matter. I frequently use them for research and share them with clients.

And when I'm really crunched for time (like this week!), my white paper collection provides a ready source of quick-yet-useful content to include in my blog. So here's my latest list of white papers worthy of your consideration:

The Online Lead Generation Guide for Professional Service Firms (Hinge). I spent most of my years as a business development professional before we had the internet. How did I ever manage? Sadly, many A/E firms still aren't making effective use of the web in researching and attracting new leads. This guide will help you better leverage the internet in complementing your traditional leading finding activities. Download

The 10 Commandments for Building a Value Proposition That Sells (RainToday.com). There's an old saying that people don't buy a product or service, they buy what they think that product or service will do for them.That's the essence of what your value proposition needs to be. This white paper will help you refine your message to potential customers, and perhaps even clarify what you're in business to do. Download

The Power of Meaningful Employee Recognition: Why One Size Doesn't Fit All (Maritz). Very few A/E firms have mastered the skill of motivating employees to perform at their best. On the contrary, when I do employee surveys, recognizing and rewarding performance is typically among the lowest scores. This brief white paper summarizes some important research on employee recognition and offers some guidance on doing it the right way. Download

Improving Trust (Trusted Advisor Associates). Strong business relationships are built on a foundation of mutual trust. The consummate experts on building trust in professional services are Charles Green and his colleagues at Trusted Advisor. This white paper outlines some strategies for increasing trust in your business relationships. Download

The "Feel Good Funnel" (Huthwaite). If you're a student of business development, you need to be reading the excellent material that Huthwaite produces, which is based on their incomparably extensive sales research. This white paper touches on one of my favorite themes: Do fewer better. That's good advice for sales and for managing business in general. Download

The Inbound Marketing Trade Show Planning Guide (HubSpot). This white paper comes from another reliable source of helpful insights, particularly on the subject of "inbound marketing." A lot of A/E firms do trade shows, but most don't do them all that well from a business development perspective. This guide will help you get more out of future trade shows. Download

The New Rules of Selling Consulting Services in 2011 (RainToday.com). Still another go-to source, and another useful white paper on how to sell professional services. Check out the "old rules of selling consulting services" and see how many still apply to your firm. Then use this white paper to come up with a few ideas for doing sales better going forward. Download

A Book Report on How Full Is Your Bucket? (Gary Tomlinson). This is hardly a new book, but it may be unfamiliar to you. It is one I highly recommend, but if you just want to glean its primary insights, read this 11-page condensation. Based in large part on research by the Gallup Organization, the book outlines how we can dramatically impact others through positive interactions. Download

Preparing for Another Possible Downturn

While the news outlets were abuzz last week about renewed concerns of another recession, many questioned whether the last one had really ever ended. But among engineering, architectural, and environmental firms, many have seen business improve significantly since the financial crisis in 2009. Will the improvement continue?

There are some disconcerting signs for 2012. Sixty percent of American cities are delaying infrastructure projects due to declining revenues. Nearly half of states are projecting budget shortfalls of over $1 billion next year. About 85% of the Recovery Act funds have been spent. And now I'm hearing of delays and cutbacks on federal projects and contracts, and clearly there are more reductions coming.

AIA's Consensus Construction Forecast in July projected a 6.4% growth in nonresidential construction in 2012. But given the recent economic news, that forecast is likely subject to downward revision. Reed Construction Data, for example, in August modified its forecasted growth in 2012 to 4.8%, down from 10.5% (admittedly one of the rosier projections). Last week, McGraw Hill dialed its projection down from a 1% gain next year to a 3% drop, with a 7% decline in non-building construction predicted.

How all this impacts your firm, you'll have to determine. I suspect the outlook will be mixed across our industry, just as it has been recently. But there's little doubt that the worst is still ahead for many A/E and environmental firms. If you're among them, what can you do? Here are a few suggestions, with emphasis on developing new business in a tough economy:

Don't discard discipline in your sales pursuits. It's easy to succumb to a volume strategy when the volume of sales and proposal opportunities decreases. But simply chasing more is unlikely to translate into winning more. On the contrary, spreading your collective business development time across more pursuits usually means spending less time on your best opportunities--and losing some you can't afford to let slip away. Every hour spent on a proposal you have little chance to win, for example, is one less hour available to do a better job on a proposal where you're better positioned.

Specifically budget BD time for seller-doers. Even in a down economy I still hear utilization goals used as an excuse for not making more sales calls or getting a head start on key proposals. Don't try to tackle these crucial tasks with leftover time! Instead, manage BD activities like project work. Define tasks, assign individuals, budget their time, and track their follow-through. Give BD the same importance as any other project. Of course, deadlines and detours will arise, but you don't ignore other client projects just because you're busy. Yet that happens with BD all the time.

Transform lower utilization into higher BD activity. Every person in your firm can contribute in some fashion to your marketing and sales efforts (for a list of possible BD tasks to be divvied up among staff members, check out this previous post). So redirect every available nonbillable hour to supporting the firm's business development activities. This is not only wise use of your resources, but helps raise employee morale and productivity because they become part of the solution.

Be diligent in following up leads. Most legitimate sales leads are neglected or mishandled resulting in lost sales, according to research. Part of this is due, no doubt, to chasing too many leads at one time. It's important to evaluate your sales prospects, just as you do (hopefully) RFPs, determining which ones to go after and which to pass on. But once you've made the "go decision," you need to give every lead the appropriate focus and effort. Again, define specific action items and carefully track follow-through.

Keep talking to your clients even if they don't have work. Client relationships are a long-term investment that you dare not neglect when there's a budget crunch. Someone else may well have nudged your firm out when the funding returns. Don't forget that clients' needs didn't go away when their budgets did. They still need help, perhaps more than ever, and you might find ways to make a big difference that will pay off later if not now. In staying engaged with your clients, don't neglect asking them for leads or referrals with other clients.

Don't cut marketing costs; redirect them. Marketing has traditionally been one of the first targets for budget cuts when business declines. And I understand why. For most firms, marketing is nice to have when times are good, but is not seen as essential when the economy tanks. The problem is that the tangible benefits of it are usually neither demonstrated nor measured. But rather than cutting back, consider redirecting your efforts from the usual ineffectual self-promotion to generating content and resources that clients find useful. Check out this previous post for insights on what works best in professional service marketing.

Commit to growing market share. Your firm's growth for years to come may depend on your ability to take more work from your competitors. Sure, you've had success beating the competition on a situational basis, but the challenge of actually increasing market share is one that few A/E firms are prepared to handle. You won't get there doing business as usual. You're going to have to out-sell, out-serve, and out-work your competitors. Get your management team together and outline the particulars of how you're going to do this.

Do things differently if you want different results. I'll not repeat the old line about insanity, but doesn't it seem crazy to keep trying the same tired approaches to BD when it's clear they're not working very well? The temptation is to blame this all on the economy, but the reality is that most A/E firms were mediocre at BD before the recession and now they've been exposed. More of the same won't cut it. I've written extensively about distinct approaches to BD in this blog, so I'll encourage you to use the search bar or browse under the BD heading for ideas. If you need more advice, don't hesitate to call or email me.

How to Have More Productive Meetings

Meetings have the distinction of being among the biggest time wasters in your office and, potentially, one of the best time savers. It all depends on whether you're holding the right meetings in the right manner. To maximize the productivity of your meetings, consider these proven strategies:

Make sure the meeting is necessary. In many firms, there are too many meetings. In others, there are too few. Every meeting should have a clear purpose. In determining whether a meeting is needed, consider different options for achieving the same purpose. Could you accomplish the same thing using email, a memo, or a phone call? Would one-on-one conversations be better?

Most meetings fall into one of the following categories: (1) informational, where you gather people to share information they all should know; (2) reporting, where meeting attendees report to the group on their activities or findings; (3) brainstorming, where people assemble to share ideas and collaborate on defining a solution or course of action; or (4) decision-making, where people meet to collectively make a specific decision.

What's the purpose of your meeting? Review what you need to accomplish and then determine whether a meeting is the best means to do it.

Distribute an agenda in advance. Send out an agenda a day or two before the meeting to allow participants to prepare and make a more meaningful contribution. Always clarify in your agenda what the meeting's objectives are.

It's usually a good idea to allocate a certain amount of time for each agenda item. You will need to balance the desire to have adequate discussion with the goal of keeping the meeting as brief as possible. Experts suggest that most meetings should last no longer than 1.5 hours.

Assign a meeting facilitator. Virtually any meeting will be more effective with a competent facilitator. Hopefully you have one or two in your office; if not, consider hiring one for important meetings. The facilitator is responsible for keeping the meeting on topic and on time, orchestrating participant interaction, and guiding group decision making. Don't automatically consign this role to the person "in charge" (e.g., office manager or project manager). For one thing, that person may not be a good facilitator. Secondly, there are some inherent advantages in not having the boss run the meeting.

Schedule most meetings for late morning. Participants tend to be fresher in the morning, and protracted discussion will be discouraged by the desire to break for lunch. Early morning meetings can cut into what is for many people their most productive time of the day to do their work. The exception is when a meeting is helpful in planning or preparing for the day's activities.

Deal with the most important issues first. Attention is the highest at the outset of the meeting, so that's when you want to tackle the highest priority or most challenging matters. Pushing lower priority issues toward the end of the meeting gives you the option, should time run short, of delaying that discussion or dealing with the matter outside the meeting.

Encourage everyone to contribute, but place limits on discussion. A skilled facilitator knows how to manage the dynamics of group interaction. Naturally, some participants will be more vocal than others. But that doesn't mean they have the better ideas. Try to give everyone a voice, and politely prevent individuals from dominating the meeting. In some cases, it may work best to have one-on-one conversations before or after with the most reticent participants.

Managing discussion is probably the facilitator's toughest responsibility. There are no specific guidelines on how long to allow discussion on an issue or when to cut off the conversation. When I'm facilitating, I usually intervene when discussion runs long and ask questions that help focus the dialogue and move the matter more quickly to resolution. I also typically redirect off-topic comments or questions to the "parking lot," where it is captured in writing to be addressed later in the meeting or afterwards.

Work toward "practical consensus." Consensus means that most participants agree and those who don't can accept the majority decision. But it's not that simple. Some people wield more influence and power in the organization, so their agreement is critical. They can undermine any course of action they don't buy into. So in practical terms, consensus means getting agreement among the people who are needed to put the decision into action.

When necessary, assign a smaller group to tackle an issue outside the meeting. Sometimes it's prudent to defer certain discussions or decisions to a later time. This may involve assigning a team to address the matter further and perhaps report back at a future meeting. Some issues are more difficult to resolve in a larger meeting, some simply don't deserve the attention of all meeting attendees. Often assigning the matter out to a working team is necessary because there's not enough time to reach a conclusion in the meeting. You want to try to avoid letting an unresolved matter bog down or derail your meeting when its settlement is not critical to achieving the meeting's purpose. Defer or delegate it instead.

Take notes and follow up. Be sure someone is assigned at the outset to take notes. As facilitator, I typically capture the main points on a Post-It type sketchpad (where sheets can be displayed around the room). If someone can also keep more detailed notes, that's a plus. After the meeting, you should distribute minutes--with a focus on action items--to attendees and others as appropriate.

A successful meeting is, of course, judged in large part by the actions that follow it. Always assign a single individual (not a group) for follow-up on each task defined in the meeting. Be sure the deliverable is understood and a deadline is set. Determine how and when progress on action items will be monitored.

It's also a good idea to at least occasionally review how meetings went and identify ways to improve on future meetings. This is particularly true on recurrent meetings. There are always opportunities for making meetings more productive. You should also consider meetings that weren't held (like kickoff meetings) that could have improved productivity.

Bottom line: Meetings consume too much of your time and influence too many important outcomes to take them lightly. Be deliberate in planning and managing meetings to get better results. The potential payback is substantial.

Performance Incentives and the IRS

The federal government is looking for new sources of "revenue" these days. Let's hope they don't target the over $100 billion spent on employee incentive programs, much of which is probably not taxed. That's because most companies don't understand that many of the incentives distributed through such programs are deemed by the Internal Revenue Service to be taxable income.

"There's a simple rule," said one IRS attorney, "There's no such thing as a gift to an employee. It's all compensation."

Well, almost. The IRS does allow a few exceptions, but they are so narrowly defined that it's difficult to devise an effective incentive program that doesn't subject employees to additional income tax. Plus, as you might expect, the rules are confusing enough that I've read varying opinions about what's tax exempt and what's not (thus I make no guarantees about the accuracy of this post!).

Before we get into the weeds about incentives and taxes, let's consider what characterizes an effective incentive. The rewards that best motivate employees are those that are:

• Valued by the person receiving it
• Contingent on performance
• Delivered immediately
• Provided frequently

As you can see, the usual annual bonuses do not meet three of these conditions. They typically are not contingent on the individual meeting specific performance goals. Worse still, they are delayed and infrequent, which renders them largely inconsequential in affecting near-term achievement.

To counter these shortcomings, many companies are using more frequent, smaller rewards. One intriguing twist on this theme is a points-based incentive program. Instead of tangible rewards, employees are given points for meeting or exceeding certain performance expectations, which in turn can be redeemed for various rewards.

There are many advantages to such an approach, both for employee and employer. But the IRS designates even relatively small rewards such as gift cards or merchandise subject to income tax. While the amounts may be negligible, paying tax on a jacket bearing the firm's logo, for example, is likely to diminish the perceived value of what is already a pretty modest gift.

From what I've read, most companies don't fully understand the tax rules applying to employee incentives and gifts. So here's my best attempt to briefly summarize them:

De minimis rewards. The IRS allows you to provide employees gifts, awards, or benefits of minimal value that fall short of constituting compensation. What's minimal? "A de minimis benefit is any property or service you provide to an employee that has so little value (taking into account how frequently you provide similar benefits to your employees) that accounting for it would be unreasonable or administratively impractical," says the IRS guide on fringe benefits. In other words, there is no definition of de minimis.

Many tax experts draw on other IRS rules to conclude that the limit is $25 per employee per year. But that's merely an educated guess. Whatever the amount, it's not much. Which means it's tough to meet that first criteria (valued by the employee) based on cash value. Good thing that verbal praise and recognition is more valuable than many employers realize--and it's free and nontaxable.

Intangible and tangible rewards. Cash gifts are viewed by the IRS as intangible and thus taxable income when above the de minimis threshold. The same rule applies to gift cards and gift certificates, and apparently to tickets to the theater, a concert, or a sporting event (although there is some difference of opinion on this latter category). The value of any intangible gifts or rewards above the de minimis level must be included on the employee's W-2 form.

Gifts such as a holiday ham, turkey, or wine are not considered income because the IRS designates them as "tangible personal property" that has nominal value. That is, as long as the value of such tangible gifts are "nominal"--whatever that means--and given infrequently. But don't give employees a gift certificate to pick up the turkey themselves. That's the equivalent of cash.

By the way, that merchandise with your company logo on it? If you give it to your employees, it's apparently subject to the same de minimis rule, although I've read a variety of opinions about this. If it's clothing that can be considered a "condition for employment" (e.g., field personnel wearing logo'd shirts) or "suitable for everyday wear" on the job (?), some experts consider this exempt.

Achievement awards programs. Tax-exempt tangible personal property "awards" (e.g., plaque or merchandise) can be provided to employees with a value up to $400 for a single employee over the course of a year. If you have a written plan, that amount goes up to $1,600. Now we're talking!

But there's a catch, of course. Apparently, this exemption can apply to no more than 10% of your employees. That's not much of an incentive program, is it, if you can only recognize 1 in 10 workers.

Interestingly, the IRS seems to be more flexible with respect to holiday and end-of-the-year gifts and awards. But, again, these do not constitute effective incentives the rest of the year.

I could go further, but my head hurts and I'm not sure what I'm telling you is totally accurate anyway, despite reading several articles and the IRS guidance on this subject. What can you do?

Learn what you can about the tax rules on employee gifts and rewards. I don't know how many IRS documents cover this topic, but here is one. As I mentioned, I read several articles by the supposed experts and found divergent views. If you provide incentives or gifts to employees that potentially fall under the rules mentioned above, you may need to hire your own expert to guide you (recognizing that he might not be totally right either!).

Determine how much uncertainty you're willing to tolerate. Apparently many companies have decided to proceed with incentive programs that potentially violate tax rules. Lacking clarity on what specifically qualifies as tax exempt rewards, they've forged ahead with the intent of doing what they believe is right for their employees. You may or may not choose to do the same, but at least be informed and deliberate in your course of action.

Focus on positive reinforcement that doesn't fall under IRS scrutiny. The research shows that cash and tangible rewards are not nearly as effective in incentivizing performance as many firm leaders assume. Check out this earlier post on which incentives work best, as well as these posts on positive reinforcement ([1] and [2]).

Recruiting and Ethics

One of my clients received a call from a competitor who was upset that my client's firm had hired away one of their employees. The competitor called the action "unethical"--even though the employee was enticed to leave by his brother who worked for my client.

Is is unethical to hire employees away from a competitor? Many believe it is. Under what circumstances? When a man recruits his brother to join him? What if an outside recruiter had been involved? Is that more ethical? Many seem to think it is since they hire headhunters who often pull candidates from competing firms.

The ethics question is becoming relevant again. Despite the economic uncertainty, many firms are doing quite well and are hiring. The best candidates are typically gainfully employed and are not actively looking to leave. So the old "they find us" approach of simply advertising openings isn't likely to be adequate as business picks up and the pool of attractive candidates shrinks. That will push many firms to recruit from their competitors. Does that cross the line for you?

I don't pretend to have the definitive answer on ethics in recruiting. But I would encourage many in this business to re-examine their convictions. One of the hallmarks of ethics is consistency. And I see some double standards in the positions many have taken on the appropriateness of modern recruiting strategies. Consider the following questions:

• Do you think it is unethical to directly recruit a candidate currently employed by a competitor?

• What if the candidate works for a firm that is not a direct competitor? Is that more ethical?

• Is it more ethical to use a headhunter to recruit from a competitor than it is to do it yourself? If so, why?

• Is it more ethical to steal a long-term client from a competitor than to steal an employee? Which action is likely most detrimental to the competitor?

Your answers will likely vary depending on circumstances. For example, you may feel more uncomfortable hiring someone from a competitor you know versus one you don't. The way you approach the candidate (calling at work vs. calling at home) will probably make a big difference. The main point of my questions is to pose a larger question: Are your responses ethically consistent? If you haven't already done so, let me encourage you to have this discussion with your colleagues.

Balancing Ethics and Effectiveness

The companies that are most successful recruiting take the initiative in identifying and pursuing desirable candidates. They don't just place ads and see what turns up. In many cases this means they are pursuing individuals currently employed by competitors.

Most A/E firms still employ the traditional "they find us" approach. Will this continue to be adequate for your firm in the future? Or do you need to adopt some form of the "we find them" approach? If the latter, you'll need to define how to to balance ethics and effectiveness. Here are some suggestions:

Clarify your firm's ethical boundaries in recruiting. The first step is to assess the ethical consistency of your current practices. For example, I know firm managers who claim that initiating the pursuit of a competitor's employee is wrong, but have no problem hiring an outside recruiter to do the same thing. Plus they offer referral bonuses to employees who bring candidates to the firm, which would seem to encourage the very behavior they call unethical. So where's the line? I think it's important to clarify where your firm stands on the ethics of recruiting.

Work within the context of relationships. At my last place of employment, I actively recruited a few individuals who I highly valued both as coworkers and as friends. I had a selfish motive, of course, but I also believed I was offering a better opportunity than their current employers could.

Is it wrong to recruit a friend? Most would say it's typically not. So a starting point in avoiding the ethical quagmire in recruiting is to work within existing relationships. This is the intended purpose of referral bonuses, to encourage employees to talk with their friends and former colleagues about joining their firm.

The "we find them" approach is rooted in relationships. Not only does this address some of the ethical dilemma, but it's a far more effective way to recruit. The "they find us" method attracts mostly strangers, where you have to make a quick assessment of the candidate's competency and character--which often leads to hiring disappointments. Building relationships first is a better way when you can do it. Plus recruiting people you know usually involves less ethical ambiguity.

Use only recruiters with impeccable ethics. My preference would be to avoid headhunters altogether, instead mobilizing your staff to leverage their relationships in meeting your recruiting needs. But that strategy isn't always adequate.

So when a recruiter is needed, it's important to select one who embodies your firm's values. The recruiting profession has its share of individuals with questionable ethics. Plus, even among the ethical recruiters, you may not be entirely comfortable with their methods.

Ask your current or prospective recruiter about his tactics. How does he go about identifying potential candidates, contacting them, screening them, selling the opportunity, helping close the deal? Would he later recruit individuals he's previously placed with another firm? Some do. Will the recruiter adhere to your firm's ethical boundaries? Always check references before hiring a recruiter.

Don't oversell the opportunity. When pursuing an impressive candidate, it's expected that you make your best sales pitch. Yet in your enthusiasm, don't neglect your duty to try to ensure a good fit. The candidate's credentials may be stellar, but that doesn't necessarily mean she's the right person for the job. Two common mistakes we make are:

• Overselling the job opportunity, either by exaggerating the potential or by failing to disclose some significant issues. This isn't always intentional, but it's misleading nonetheless.

• Failing to acknowledge some serious shortcomings on the candidate's part. For example, overlooking weak interpersonal skills because we're so enamored with the person's technical capabilities.

Integrity in recruiting demands an honest assessment of the benefits and risks for both parties. If you uncover factors that suggest a poor fit--no matter how talented or qualified the individual--talk about it with the candidate and with colleagues involved in the hiring decision. I've seen situations where the firm's honesty in such matters encouraged the candidate to join the firm later, when either the position or the timing was more attractive.

Recruiting in a highly competitive market, much as with business development, presents a myriad of both tactical and ethical choices. Some firms choose to ignore the most effective strategies, excusing their lack of drive by calling it "more professional" or ethical. Other firms, by contrast, let the pressures of competing cloud their judgment in matters of integrity and ethics.

When it comes to recruiting, has your firm adopted practices that are aggressive, effective, and ethical? Or are you struggling to find that middle ground? If the latter, hopefully this post will at least get the dialogue started.