A/E Mid-Year Executive Outlook

With the first half of the year already behind us, it’s time to check in with A/E leaders across the country for our annual Mid-Year Executive Outlook.

A robust national economy and strong industry fundamentals have made executives as confident as we can remember, but challenges loom as we enter a mature cycle phase. These individuals touched on a wide range of subjects such as how they are coping with talent shortages, sectors with the best growth prospects, guidelines on making sensible acquisitions, and plans for the summer.

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Chad Surprenant, P.E.

President & CEO

ISG

Mankato, MN

How has ISG’s performance fared so far in 2018?

To date, 2018 is shaping up to be a fantastic year for ISG. We are up approximately 27% in revenue from 2017 year on year to date. In general, the markets we serve are trending positively. Being busy, I think we lost a little focus and tried to stretch a little on some proposal work early in the year. We could have fared better in that timeframe, but a market leader retreat helped right that before any pain was felt, and we are back on a nice winning streak.

Given tight labor markets for A/E professionals, have you had to change your approach to hiring and retaining talent?

We are constantly changing and evolving our hiring. We have developed a very attractive firm, strong culture, and invested heavily in marketing and talent to tell our story better through multiple means; personal, social media, and videography to name a few. It is working. Our Talent Engagement team has a marketing background, and from that we focus heavily on staff referrals and building personal relationships. Our Human Resources group is somewhat separate from Talent Engagement. The Human Resources team maintains competitive benefits and other employee welfare focus.

As a multidiscipline firm working across many services and markets, where have you seen the most promising opportunities for growth?

ISG is located in the upper Midwest, but we perform work nationwide. As a true multidiscipline firm serving many markets, we believe it is very important to understand our geography’s core economy. From there, we provide service to those markets which keep that economic engine humming, such as food & beverage, industry, K-12 education, and agricultural drainage and then the markets that are needed (public works, civic/culture, residential, etc.) to support those primary economies. Fortunately, our core economy is generally food and agriculture based, and those are always necessary.

ISG is 100% employee-owned through an ESOP. How has that been a competitive advantage?

The ESOP culture is one that we had prior to becoming one, so the transition has been very easy. Being an ESOP, and wanting to communicate its virtue has been focal in our communications with current staff, prospective employees, and acquisition targets. In all three of those camps, it has been advantageous; current staff have great pride in what they have grown and want to stay to see where it goes, prospective employees see it as a very real retirement plan option, and acquisition targets recognize that they are going from one ownership position to another. We have been told that becoming an ESOP will amplify the current culture you have, and we believe that to be true.

You have made select acquisitions of architecture and engineering firms as means of growth? What do you typically look for in target firms?

Since our first acquisition in 2012, only 25% of our growth in staff has been through acquisition. The primary factors we look at when considering an acquisition are; geography, specialty service, strength of clients, and strength of staff. We function as a single profit center firm with a decent sized geographical footprint. For example, if we are considering a firm who has a specialty service and a geographic-centric business model, we know that we can take their specialty expertise out to the market over a considerably larger footprint which allows us to increase their business line while being more selective in choosing the client and thus more profitable than the acquisition target was before. Just recently, we executed our first acquisition with the primary intent of human resources. The acquisition target was a subconsultant service provider, and with ISG being a multidiscipline firm, we knew we would likely not retain their client base, but we wanted the people. Most of our growth is organic, and expansion geographically and/or acquisition is often to provide aspirational opportunities for our emerging leaders.

What are your plans this summer for rest and relaxation?

I coach my youngest son’s 13 year old travel baseball team. We are in the midst of weekend tournaments now, but our state tournaments will be over in late July. Hopefully, we can work in a few long weekends here and there. Another local business person and I bought a Northwoods League Baseball Team, the Mankato MoonDogs. We have been watching several of those games at our recently renovated, ISG designed, ballpark, but would love to catch more games on the road.

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