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Disrupting business - changing the way engineering firms measure success
This September, ACE New Zealand’s Chief Executive, Helen Davidson, travelled to Geneva to attend the FIDIC Global Infrastructure Conference (GIC). Previous FIDIC Conferences have provided a wealth of inspiration in terms of emerging approaches to global challenges and opportunities around infrastructure delivery – and this year was no different.
Among the sessions Helen attended was a presentation by members of the 2020/2021/2022 cohort of FIDIC’s Future Leaders Programme. As part of the Programme, participants were challenged to identify opportunities for change in our industry and prepare a presentation for conference attendees. They decided to develop a fresh set of KPIs for measuring business success that will be more relevant to the evolving needs of engineering firms today.
We sat down with Siobhan Robinson, a member of the 2022 Future Leaders cohort who presented at the conference, to learn about what she gained from the programme and why she thinks the way engineering firms measure success needs to change.
Firstly, tell us a bit about your professional role and where you’re based.
I’m a Project Engineer with Kerr Wood Leidal Associates, a Canadian engineering firm that specialises in water infrastructure. Our clients are mostly municipalities, utilities, and improvement districts, but we also do a lot of First Nations work. What I love about the company is that we're mid-sized so, from really early on, I have been able to get into a people-facing role and work closely with my clients. That means I get to see the impact of my work first hand, which is really rewarding.
Prior to beginning my career, I gained my professional qualifications at the University of Toronto. I first completed a Bachelor of Applied Science in chemical engineering, and then a Masters degree in materials science and engineering.
Away from the office, I’m an active member of ACEC (the Canadian equivalent of ACE New Zealand) and volunteer with the BCWWA (British Columbia Water & Waste Association) as co-chair of the Drinking Water Technical Advisory Committee. I also volunteer with an organisation called Science World which runs a school programme called ‘Scientists and Innovators in Schools’ – sharing why I decided to become an engineer is such an amazing reset for me, especially after a hard week.
You’ve recently completed the FIDIC Future Leaders programme – tell us about that experience and what you gained from it?
The programme started earlier this year with seven webinars and culminated in optional attendance at the FIDIC GIC. 32 participants from 14 countries, speaking seven different languages elected to attend in person, it truly was a global cohort!
The highlight for me was the excitement and energy I felt from connecting with my peers, and from challenging myself to think outside of my normal space. If you could find a way to bottle that, or just find a way to reinject that kind of excitement, I think that would go a long way towards keeping people excited about the change we can make as engineers.
Along with others from the 2020/2021/2022 cohort, you recently presented on ideas for disrupting the way we do business at the FIDIC Global Infrastructure Conference. Why do you think we need to disrupt the way we measure business success?
The world has changed so much, not only in the last couple of years with the pandemic, but in the last few decades. If you think about the world we were born into versus the world we're living in today, there’s geopolitical conflict, the climate crisis, technology gains (and challenges!) and so many world-changing events happening around us. Today’s world is much more interconnected, but also much more complicated and difficult to operate in.
If you focus on the engineering sector, it’s clear we're seeing a lot of young professionals leaving – not only our companies but the industry, because we have so many transferable skills.
That means, thinking from an organisational perspective, retention needs to be maximised. With this in mind, the question becomes: how do we eliminate the barriers negatively affecting people’s experience of engineering and causing them to leave the industry? That’s where things like supporting mental health, creating a sense of purpose at work, and managing burnout become vital.
As well as retention, we also know a constant battle for firms is optimisation of utilisation rates to ensure profitability. Considering that both retention and utilisation are vital to success, it’s clear our leaders need to think carefully about how to balance the needs of individuals with those of the organisation.
Then, stepping back to take a macro ‘world view’, there are also environmental impacts to consider if our sector wants to leave a positive long-term impact on the planet. To achieve this, better measurement of environmental KPIs is vital. The need to measure more accurately has also been complicated by changes to our ‘ways of working’ following the Covid-19 pandemic.
Ultimately, for the infrastructure sector to thrive, we need to measure the things that matter today (and tomorrow!) rather than sticking to what was considered important in the past.
Tell us about the KPI framework the Future Leaders in this cohort developed?
Our new reporting models looked at three key areas we felt would make the greatest impact on the way the infrastructure sector operates globally. These were the environmental piece, the health of the business and the retention of good people.
Starting on the environmental front, we looked at greenhouse gases as measured by the Scope 1, 2 and 3 emissions framework, with a particular focus on Scope 3 (emissions created by activities that use assets not owned or controlled by the reporting organisation, but which directly impact in its value chain).
Scope 3 is particularly relevant following the ‘work from home’ practices many firms implemented during the Covid-19 pandemic, which have subsequently been partially retained post-lockdowns. Under this scenario, while the change to working arrangements caused Scope 1 and 2 emissions to decrease for many companies, Scope 3 emissions are likely to have increased and, in most organisations, are not being accurately captured. Our proposal was that, to truly measure an organisation’s environmental impact, KPIs must include measurement of emissions generated by those working from home.
Moving on to consider how best to measure business health, there were two key measures we used to generate data that would lead to optimisation of utilisation rates.
The first of these was what we called the ‘Productivity Index’. This is a measure of net revenue generated by an employee, divided by the total costs associated with facilitating productivity (things like labour cost, marketing and training). It is designed to be looked at in conjunction with a second measure, which is a quadrant system that plots individuals according to their productivity versus utilisation to identify those that need additional support.
The last measure we looked at was around people and retention – because, after all, the willingness of engineers to remain engaged in the sector is vital to its performance.
Our approach was to look at ways of properly estimating the value (or the cost, depending on how you look at it!) of employee turnover with a view to creating a case for further investment in people in order to retain them. This equation is the total amount spent on retention, divided by 10% of direct labour costs.
For organisations looking to use this employee turnover equation, I think it’s important to note that ‘investment in people’ doesn’t just mean bonuses and splashy Christmas parties. Rather, we’re saying more investment is needed in things that add value to people’s experience of work. A great example would be allocating extra non-billable time to employees at all levels, to enable them to have meaningful conversations about challenges and time to learn on the job without getting stressed about meeting billable hours targets.
What are the first steps that you think businesses need to take to begin implementing these new KPI frameworks?
One of the obvious ways is to look at the systems and data collection points that already exist in the business. Consider what’s there and how it could be utilised and adjusted to provide data that indicates how the company is performing against these new KPIs. For example, if you’re doing employee satisfaction surveys then use these to start identifying pain points and invest resource to address those as part of your retention effort.
Another thing I’d say, which is potentially the most important thing to start with, is to tell people what you’re doing, how you’re doing it and why. That way it’s not just happening in the background and, once people start finding out what you’re doing, they’re more likely to engage with your efforts.
Are you going to be trialling any of the recommendations in your own business?
Absolutely. I'm meeting with the leadership team of my company in the next couple of weeks to talk about how we can better account for all of the knock-on effects of staff turnover.
One of the things I’d like to trial is creating some time codes in our financial accounting systems, which allow people to allocate time to seek support from their colleagues when they’re starting with us. The theory is that if the time codes exist, and people are encouraged to use them where appropriate, it becomes much easier for people to seek and give support without feeling they are not meeting their billable hours targets.
Tracking this kind of time spent will also give us a much better insight into what the costs of onboarding a new team member really are, which then creates a sound argument for investment into better induction frameworks.
Finally, if you were to challenge the industry to do one thing differently today, what would it be?
I think we need to start involving young people within organisations more. If you don't have a junior or an intermediate employees group, then form that group, put some budget to it and get them talking in a comfortable space.
Get a few people who are excited to be leaders to start sharing what that group feels – both pain points and opportunities, and then also give them some responsibility. If they come up with a good idea, give them some real budget and the opportunity to trial a program or develop a new index – then work with them to make it successful.
Interested in learning more about the KPI reporting framework developed by this year’s FIDIC Future Leaders Programme participants? You can watch their full presentation at the 2022 Global Infrastructure Conference here.