Big is not best
January 1, 2000
By Canadian Consulting Engineer
LETTERSAs the founding principal of a firm celebrating its 25th anniversary next year, I read with great interest the article "Big Fish, Little Fish" (CCE August-September).The notion that consulting ...
As the founding principal of a firm celebrating its 25th anniversary next year, I read with great interest the article “Big Fish, Little Fish” (CCE August-September).
The notion that consulting firms have to be big to survive is hogwash. Our firm is a group of 175 people operating in western Canada. We have no difficulty competing with the big firms even on very large projects, which we do regularly by teaming up with other, complementary firms. Size may increase a firm’s ability to “develop slick packages” but there are significant downsides to bigness. We capitalize on these when we compete with large firms and in our day to day servicing of clients. Furthermore we have never found ourselves in the position that we are unable to buy equipment essential to our practice, no matter how expensive.
The article referred to the “plight” of mid-sized firms and the inability of the owners to entice successors to take over the company. This is not a result of a set of circumstances over which majority shareholders have no control. Founders make a conscious choice in some cases to limit the participation of key employees in the business until they are ready to retire. This strategy of not investing in succession planning inevitably results in the business being sold to outsiders. While this often is financially beneficial to the major shareholder(s), the benefits to remaining staff and clients are not quite as obvious.
A different approach is to structure the firm more like a professional practice and engage many key staff in ownership and leadership. Under this model, succession is an ongoing development and never becomes a problem. This is the strategy I chose for Urban Systems because we want to be around 100 years from now, more or less the same size and with the same philosophy. We trade our shares internally at net book value (approximately 25% of market value), so prohibitive buy-in costs are not an impediment to the engagement of key participants early in their careers. Partners understand that ownership in our firm is not a key to great wealth, but those who are skillful and work hard are generously rewarded over time.
R.T. McQuillan, P.Eng.
Urban Systems, Kamloops, B.C.