<p>Tough? Sure. But still doable. For example, I can think of several MIT engineering grads who turned down hotshot consulting/banking jobs in order for engineering jobs. The catch? These were engineering jobs at companies like Google and Facebook. They clearly weren’t going to just work at any old engineering firm. It has to be a top notch engineering firm, and these firms do exist. Heck, I heard of some other engineering students who were set to work at McKinsey or BCG but considered it to be their ‘second choice’ because what they really wanted (but didn’t get) was an offer from companies like Google or Facebook. Imagine that: strategy consulting as a ‘backup career’ to the top-notch engineering firms.</p>
<p>The problem is that there just aren’t very many of these top-notch firms. Most engineering firms are, frankly, mediocre.</p>
<p>But you can only do that AFTER you have a solution to the marketing and image issue. I imagine Ford didn’t have that problem when he made the HR change.</p>
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And that happens because they can get away with it. There are probably companies out there that operate under a business model where they keep costs down, hire mediocre engineers, and take on projects by being the least expensive choice… and they do fine when it comes to the bottom line.</p>
<p>It’s all well and good to say that engineering firms should wake up one day and be more like private equity firms and hedge funds. If they did this, they’d be out of business almost immediately, though.</p>
<p>The reality is that this is going to be a long road, and it’s going to take many, many years, and many firms like mine making concerted efforts towards improving the salaries and incentives offered to engineers in order to change things.</p>
<p>Maybe we should just get some of that… Internet money. Yeah, that’s it. Internet money.</p>
<p>That’s not true. The HR change was part and parcel to the marketing and image change. Before the change, Ford Motor Company was an infamously stressful place to work, as Henry Ford would mercilessly push for more output from its workers, such that the company developed a reputation as undesirable employer relative to its competitors and as a company plagued by high employee turnover rates. Many workers ended up at Ford only because they couldn’t get a job at another auto company. </p>
<p>Henry Ford solved these problems by doubling wages, and, unsurprisingly, employee turnover dropped to such a miniscule level that the company even stopped bothering to measure it, and soon, the very best auto workers in the country were soon flocking to work at Ford. This resulted in soaring productivity such that the cost-per-vehicle actually drastically declined, which allowed Ford to underprice its competition repeatedly and drive numerous other auto companies out of business on its way to becoming the dominant auto firm in the US, with over 50% market share. Other firms simply got crushed because they had poorly paid and hence unproductive workers. </p>
<p>The point is, HR strategy is an integral part of your overall operational strategy. Higher pay attracts better workers which then in turn allows you to vastly improve your operations. I think every engineer will tell you that, at any firm, the vast majority of the work is actually produced by only a minority of the people, and many employees are not very productive at all. Hence, wouldn’t it be better to hire more of the productive people (by offering better pay) and fewer of the less productive people (by maintaining high hiring standards)? That’s what Henry Ford did. </p>
<p>{Now, to be fair, Henry Ford was no saint. As ruthlessly merciless as he was to his competitors, he was just as ruthless towards labor unions, repeatedly attempting to crush them. Hence, I am not saying that Henry Ford was perfect. What I am saying is that he did happen to discover a highly successful HR strategy.} </p>
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<p>Of course. But we’re talking about what individual firms can do, for they do represent the demand for engineering labor. Think of it this way. If there are lots and lots of engineering firms that offer excellent salaries and career advancement, why would anybody who has any skills want to work for one of the low-cost firms? Ultimately, it will mean that those firms won’t be able to find anybody decent who wants to work for them because they’d rather work elsewhere. Again, it’s just like how Ford was basically able to “steal” all of the best workers from his competitors by offering such high pay. Hence, with one stroke, Ford both vastly improved its own productivity and gravely damaged its competitors’ productivity.</p>
<p>Sure, it will take time. I don’t expect this to happen overnight. But, like Confucius said, a journey of a thousand miles begins with the first step. You gotta start somewhere. </p>
<p>Frankly, I think what should happen is that the dynamism of the economy should be increased such that more entrepreneurship can occur to upend the old dinosaurs. Google, for example, didn’t even exist 10 years ago yet, amazingly, already employs about 20k people, and is still rapidly hiring. What makes that statistic even more amazing is that a great proportion of them are engineers. {For example, companies like GM obviously employ many times more people, but the vast majority of them are blue-collar laborers, with only a small percentage being engineers.} </p>
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<p>Ha! You say that facetiously but I think it contains the seed of an actually workable idea. The truth is, the Internet is no longer “hot” when it comes to startup/venture-capital funding. The hottest VC investment field right now is alternative/green-energy, and I would argue that the civil/structural engineers have an important role to play here, for example, not just in the obvious applications such as building better wind turbines or power plants, but also in the construction of environmentally friendly houses and office buildings with recycled materials and that minimize carbon/energy usage. Heck, I would argue that the latter has great potential because of its consumer marketing potential: rich people have demonstrated that they are willing to pay a premium in order to brag to their friends about how environmentally conscious they are. For example, the reason why the Toyota Prius is so popular is not really because it actually significantly reduces carbon emissions or overall costs - because the reductions are quite minor - but just because people just want to be able to say how environmental they are, regardless of whether they are actually truly helping the environment at all. But that just shows you that rich people, i.e. Hollywood celebrities, would surely pay a big premium to be able to say that they live in an environmentally friendly house or work in an environmentally friendly office building. That can ultimately mean big fat juicy margins for the engineering firms who build it. </p>
<p>I agree that HR strategy is important, but my point is you can’t just double salaries and that’ll fix things automatically. It has to be part of a broader overall strategy. There has to be some sort of expectation of greater revenue, and I’m not convinced this alone will do. </p>
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<p>Of course those low-cost firms will have people that will work there. Do you think that everybody with an engineering degree will be get hired by those A+ firms? Of course not. There will always be those at the bottom, and they will end up working for companies at the bottom. That’s not going to change. That’s not what I consider to be the problem. The problem is that clients are willing to hire those low-cost firms and won’t put a premium on the quality of the product. We have to change the mindset of those with the money.</p>
<p>Greater revenue…or lower cost. Yep, lower cost. Again, allow me to point out, by paying better, you would be attracting the most productive engineers, which would ultimately mean that you may actually be able to lower your labor costs. That is precisely what Ford found - by doubling wages, he actually lowered total labor costs due to decreased turnover and increased productivity due to the high quality and high morale of his (well-paid) workers. </p>
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<p>Nor do I. I never meant to imply that we need to eliminate all the mediocre firms. Heck, like you said, somebody need to employ the mediocre workers. </p>
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<p>You got it. </p>
<p>But the term ‘quality’ needs to be explored because it is very much in the eye of the beholder and therefore a concept that can (and is) manipulated. For example, is the Prius really a “high quality” car? Not if you consider quality to be the actual environmental savings, which as I have said, are quite minor. But it is clearly a very high quality car in terms of being able to brag to your neighbors about how environmentally conscious you are. </p>
<p>Similarly, numerous white-collar service firms have actually found that high rates actually increases demand. Yep, you charge more, and customers exhibit more demand. Why? Because the “quality” of these services are often times extremely hard to judge, meaning that you don’t really know who’s good and who isn’t, and so customers often take high price as a mark of “quality”, or in other words, if you can really charge that much, you must be good. For example, I seem to recall reading a reading study on consulting firms that found that those firms that increased their rates actually gained business. </p>
<p>But the bottom line is this. If engineering firms are going to treat their product as a commodity, then they should be surprised when consumers are going to be willing to pay only commodity prices. Engineering firms who want to break out of that trap will have to learn to treat themselves as luxury designer goods, for which consumers hire you not because you’re cheap but because you’re fashionable. That’s how Apple can charge $200 for what is basically a $50 hard drive.</p>
<p>I actually said it more just to gratuitously reference South Park, but facetiousness is good, too!</p>
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<p>Unfortunately, some industries have a harder time doing the ol’ bait-and-switch. I’d say that the folks who fork out a billion dollars to build a new stadium probably know a lot better what sort of money they’re supposed to be paying for a stadium, as opposed to the typical consumer who may do a little research on what hard drives cost. How do you convince the highly-informed consumer of huge-ticket items to pay significantly more <em>now</em> for services that they could get for lower prices <em>yesterday</em>?</p>
<p>First off, I’m not sure that the folks forking out the billions for new stadiums really do know how much it’s supposed to cost, as it certainly seems to be the case by all of the cost overruns that always seem to happen with regards to the stadiums that my favorite sports teams play for. {Then again, maybe the real problem is that my sports teams just happen to be poorly managed as they also seem to end up losing lots of games that they shouldn’t lose, but that only speaks to the flip side of the strategy coin: find clueless customers and milk the hell out of them.} </p>
<p>But the other obvious way is to simply offer a particular kind of service that nobody (or at least, only a few) competitors can offer. Or, even if you can’t offer such a service, make your customers think you can. To be perfectly honest, this is how strategy consulting firms like McKinsey get away with charging huge multi-million dollar consulting gigs, because the customers think they’re getting high value advice (even though, trust be said, the advice often comes down to telling the customer what they already know). After all, this isn’t just any old “advice” being given, it’s advice from McKinsey, with all of its Harvard and Stanford MBA’s, who is telling you. </p>
<p>Or, if you want an engineering example, consider IBM of the old days - their old mainframe systems were ridiculously expensive and all sold to giant corporations and government departments (because they were the only organizations that could afford it). Most of us don’t remember, but back in the old days, IBM was bigger and more profitable than the entire rest of the world’s computer industry combined. Heck, you can even look at IBM today. A far smaller and less powerful company to be sure, and one that derives most of its revenue from computer consulting & integration, but a company that still wins multi-billion dollar software consulting engagements to customers who ostensibly should know what it really costs. How does IBM keep doing it? I’m not sure, but it surely has something to do with the strength of the brand name combined with deep customer knowledge and a ‘mystique’ of safety (as the saying goes: “Nobody ever got fired for choosing IBM.”)</p>
<p>That would only work if you require everyone to have a PE. First of all, this would only apply to civil engineering and other infrastructure fields. I assume we’re talking about only these fields, but it still won’t work because only those signing off on the drawings need the license. You will probably end up with the same quality work, but getting funneled through fewer people. If you change any licensing requirement, you’d start at the bottom with an entry-level requirement (such as EIT certification). </p>
<p>Another reason I’m skeptical is that increasing the PE requirements will never get through the state boards, especially if your only reason is to increase your own pay. As aibarr said, why should we pay more for the same services we could already get at a lower price? Besides, I believe the license should only certify that you know enough to design something safely, but not necessarily efficiently. Nobody’s going to die if you overdesign something, but if it gets underdesigned, then there’s going to be a problem.</p>
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If I knew the best answer to that, we’d be implementing the plan already. I think one way of helping would just to be involved in public policy because the government is probably the single most influential factor on how successful our profession is. Know how your local Congressmen are voting on bills. Write letters to them letting them know of your position on a certain issue pertaining to our profession. Get others to do the same. It’s a shame that it’s taking the I-35W collapse, Hurricane Katrina and other disasters to make the public realize the importance of infrastructure projects.</p>
<p>Oh, and yesterday I came across this report that relates infrastructure investment with the global economy. I’ve only started reading the 60 page report, but I suggest everyone at least take a gander. </p>
<p>There’s also a short summary of it in the August 2008 edition of ASCE News (pg 28-30). </p>
<p>On a final note, with the presidential election coming up, find out what Obama’s position on infrastructure is. What does John McCain have planned to improve it? This isn’t an issue that should be overlooked.</p>