Feast or Famine is a frequently acknowledged part of being a CRM archaeologist. Because many of our companies are so poorly managed, they live and die by close-ended, temporary cultural resources contracts. The company goes into the toilet if the management is unable to land contracts. When the project flow dries up, people get laid off.
This week, I learned about the untimely mass layoff at a Great Basin CRM archaeology firm. Here we are, two weeks before Christmas and a group of archaeologists is going to have to ask Santa for a new job in the middle of the winter– a time when most local companies are dormant.
R. Joe Brandon wrote about these layoffs on the ShovelBums blog. Brandon gave his condolences and has started thinking about an ancillary ShovelBums list for people who currently have a job but are on the brink of layoff. This might give these folks a chance to find a job before their time runs out. Chris Webster remarked about the layoffs on Facebook and wondered how much money could have been saved by using digital solutions to streamline work flow. Indeed, I wonder the same thing given our antiquated field methods.
I would also like to tell these folks that I understand your plight and truly feel for your pain. I am sorry you got laid off. I know words cannot solve your problems, but just wanted to say I’m sorry.
I also wanted to tell you that I’ve been in your shoes before. I’ve been laid off and have had to scramble just to make sure my kids had food to eat. I also know the two main problems with most CRM archaeology companies and the reason why feast or famine is so common: poor company capitalization and lack of diverse revenue streams.
Once upon a time, at a world-renown CRM archaeology company far, far away…
A few years ago, I was called into the large meeting room along with about 10 of my co-workers. The company just finished working on a huge multi-million dollar project but had been bleeding red ink for the last 18 months. They landed this major project and it still wasn’t enough to cover all the bills. During the previous year, the company had shed its field staff. Now, we were the only ones left at this branch.
The project directors and PIs all sat down in the conference room (the company owners didn’t even have the gumption to Skype in for the meeting). We PDs were informed of two options:
Option A) We could all drive ourselves 400+ miles to a project being conducted by another branch in another state. We would get lodging during the week, but our drive time and gas was unpaid. We were not getting per diem or food allowance because the hotel had a microwave (Somehow, this was considered a kitchen so the supervisors reasoned that, since we cook food at home, we could do so in the field. We would have to buy and cook our own food with no reimbursement). The work schedule was 5-eight hour days, so we’d have to drive home on our own time and dime just to see our families for a few hours before driving back to the job site. Or, we could pay for a hotel for the weekend out of our own funds and hang out in the middle of the Mojave Desert doing nothing.
We were told this would give us at most four more weeks of work. After that, there were no promises.
Option B) We could take a 100% hours reduction (alternative terminology for being laid off). We could sit at home, collecting unemployment and wait for the company to call us back (The bosses seriously thought we’d just sit there until called back into action).
Here was a group of experienced, college-educated individuals with families, car payments, mortgages, and real-world lives who were being told they could choose between being laid off now or in a month (which is what ended up happening). I’d worked with these people for years. We’d come in on budget on dozens of shoddily scoped projects that shouldn’t have turned a profit. We’d somehow done our job despite the fact that much of the company revenue was spent on proposaling PIs, some of whom hadn’t landed a contract in years. These bosses came in every day, scanned FedBizOps for something to bid on, and, when they didn’t find anything, they spent the rest of their day editing our reports ad nauseum, going to conferences around the world, writing journal articles, and working on their fantasy football teams.
With PIs gorging themselves on overhead like an overweight man at a Las Vegas buffet, the arch techs and project directors were out in the desert sweating our asses off working 12-hour days while only getting paid for 10 hours of work (salary, anyone), double-bunking in roach motels, and, in the end, it was we who were let go. Most of those PIs are still at this company today. They never missed a mortgage payment. None of the techs are there anymore.
I chose Option C: Grab some unemployment to feed my kids in the near-term, find another job, and help my friends do the same. I also started a blog, wrote some eBooks, and began a process of divesting myself from being subject to crappy CRM mismanagement (I’m remedying my own plight as a CRM archaeologist).
What are the two things most CRM-only firms do poorly?
Answer: capitalize and diversify their businesses.
How come most CRM-only companies live and die by the GAO? Because company owners continue to focus on more proposaling and rarely invest in income-producing ventures that could bring in revenue–assets that could be sold or borrowed against in times of need. Why do you think big environmental firms are buying up CRM companies left and right? Because they are diversified across a number of different environmental consulting activities (environmental design, architectural history, and biological and geological consulting). These companies are “one-stop solution shops” because they don’t rely on a single revenue stream and are spread across the spectrum of NEPA/NHPA compliance.
The largest environmental firms are also well capitalized. They have a stockpile of assets and money. They can also raise funds through stock sales that help keep them afloat during times of dearth.
Most CRM-only companies behave like heroin junkies: They’ll do anything it takes to land a contract (lowballing, underbidding, cutting corners, gouging clients with change orders). Anything to bring in the money to pay their employees because they are not diversified and are not well capitalized. They have nothing to bring them through tough times.
I may sound like a whining field tech, but I understand that most CRM PIs are archaeologists too. They’ve been in our shoes. They’ve been laid off before and had bills to pay too. Most PIs truly feel for us when we’re asked to go the extra mile even when it may be our last project. PIs care about their employees/friends/peers. Their concern for our welfare is what drives them to do what they do to help pay our bills.
I’m not the only one who has noticed that CRM business-as-usual is not going to keep our industry afloat for another 50 years. Our forebears that started this industry were cashing in on a one-time boon that has run its course. Environmental consulting is a mainstream, multi-billion dollar industry. There are now publically traded firms that do archaeology. If CRM-only outfits are going to survive for another half century, they are going to have to do things differently.
Of course, I have some suggestions:
Capitalization (n.)– (1) the practice of capitalizing; (2) the total company investment minus liabilities, (3) an estimation of the value of a business.
In order to survive periodic downturns, CRM companies are going to have to start doing a better job at capitalizing their businesses. They are going to have to start using company revenue to buy and create things of value that can be sold or leveraged during a downturn.
In his SAA2014 presentation “Heritage Business Problems”, Chris Dore remarked that CRM-only companies need to do a better job of investing in assets as a means of growing the business. This means improving capitalization in order to make the business have a bigger market value, which can help you buy smaller firms or additional assets. Purchasing assets also provides additional revenue, which brings me to the second solution;
Diversification (v.)– expand business activities into disparate fields.
CRM-only will not work for the next 50 years because there is too much competition. Archaeology consulting is turning into a commodity (Dr. Dore said more on this in his SAA2014 presentation too). I believe the future of CRM is actually heritage conservation consulting, which incorporates planning, design, historic preservation, cultural anthropology in order to help communities improve their built environment and run-down districts. Heritage conservation consulting will require a breadth of professionals not typically employed by CRM companies including planners, architects, real estate acquisition and development professionals, and construction contractors. These specialists do not need to be directly employed by the CRM company. In fact, creating strategic partnerships for this kind of work is a benefit to all, especially CRM companies that want to keep overhead down.
CRMers have a lot to give back to their communities in addition to archaeology know-how. We are anthropologists. We are trained to observe and analyze human behaviors in a number of different ways. Our craft forces us to think about the human condition, which is something the world desperately needs.
Thinking outside of the box: asset accumulation, tax breaks, and collaboration
I’m just going to throw this out there because it’s something that has been on my mind for months. This idea is central to what I’m trying to do with Succinct Research.
How can we make the shift from CRM consulting to heritage conservation consulting? I have some ideas but, because I don’t know anyone that has ever tried this, I do not know if it will work. However, the strategy has generated millions for historic preservation groups and preservation-oriented developers. Surely it can work for us.
Capitalize CRM companies by purchasing/refurbishing/and managing historical properties— The economic downturn created more millionaires than it destroyed. Real estate gurus stood to gain the most. There is much potential in buying older buildings, updating them, and either selling or renting out the resulting income property. CRM companies have never really tried this, but, if you know how to create a spreadsheet, you can calculate return on investment from purchasing and managing a historical property.
Save/make even more money by making these buildings environmentally friendly. You can go as big or small as you want with this activity.
Learn more by reading:
2010 Sustainable Preservation: Greening Existing Buildings. John Wiley and Sons, Hoboken.
2010 Green Restorations: Sustainable Building and Historic Homes. New Society Publishers, Gabriola Island, British Columbia.
Peiser, Richard B. and David Hamilton
2012 Professional Real Estate Development: The ULI Guide to the Business. Third Edition. Urban Land Institute, Washington, D.C.
Use Property Development Tax Breaks— Developers leave millions of dollars in tax breaks on the table simply because they aren’t aware of how these incentives can be stacked to reach maximum benefit. Michael Keith, CEO of the Downtown Tucson Partnership has begun advising clients on how they can stack tax disparate incentives, many of which can be used on historic properties, in order to get the most return on investment. This Incentive-Based Development model has been used with great success in downtown Tucson and other cities. Learn more at the Downtown Tucson Partnership website.
Governments want us to reinvest in older districts and have created a wealth of tax incentives to promote this activity. Here are just a few federal incentives that may apply to historical properties.
|Select National Economic Incentives for Historic Preservation in the United States|
|Tax Reform Act||USA||1976||Removed incentive to demolish historical buildings|
|Revenue Act||USA||1978||10% tax credit for commercial buildings in use for over 20 years|
|Main Street Program||USA||1980||Funding for local preservation by National Trust|
|Economic Recovery Tax Act||USA||1981||Three-tiered tax credit for rehabilitation of historical structures; up to 25%|
|Tax Reform Act/Federal Low Income Housing Act||USA||1986||Reduction in tax payer’s federal taxes for 10 years|
|Tax Reform Act||USA||1986||Historic rehabilitation credit lowered to 20% up to $7,000/year|
|New Markets Tax Credit||USA||2000||Tax credits for up to 39% of qualifying expenses for projects in distressed areas|
|Housing Recovery Act||USA||2008||Increased incentives for using federal rehabilitation tax credit|
Basically, a CRM company can use its understanding of historic preservation and learn a little about related tax breaks to make the purchase of older buildings very lucrative. Once they’ve done this a couple times, they can start advising other clients and local governments.
Learn more about HistPres tax breaks:
Rypkema, Donovan D.
1994 The Economics of Historic Preservation: A Community Leader’s Guide. National Trust for Historic Preservation, Washington, D.C.
1977 Innovative Tools for Historic Preservation. National Trust for Historic Preservation, Washington, D.C.
Collaborate with Governments, other Businesses, and Employees— No company can operate in a vacuum, but many CRM companies act like telling the public and other archaeos about the work they do is tantamount to giving away national secrets. How many companies freely share their CRM reports with other CRM companies? What about their artifact databases? What about their 5-year plan? I can almost guarantee no CRM company makes all three of these readily available to others in their field. Nobody knows what we’re doing, how we did it, and our results. This stonewall has literally crippled our industry.
CRM companies act like there isn’t enough money to go around because, if we stay the course we’ve been following, there isn’t. There is a finite dollar value of government CRM compliance contracts and that quantity is steadily shrinking. In order to stay relevant, CRM companies are going to have to use their expertise to help local governments grow through heritage conservation. This will depend on diversifying our skillset and offering a different kind of service.
We are also going to have to share our knowledge with others. This is a matter of survival because nobody knows what we do. Our clients think we’re just another obstacle. The public thinks we dig dinosaurs. We’re going to have to clearly articulate our services and tell the world about what we’ve done. If companies start diversifying and capitalizing, they won’t be so dependent on one-time government contracts and won’t remain in protectionism mode.
Heritage conservation will require a constellation of experts that cannot possibly be housed under a single roof. CRM companies will have to network with other companies, including ventures outside the purview of cultural resource management.
Finally, companies are going to have to invest in their employees and allow them to shine. I’m not just talking about article bounties and paying for conference trips. Employees will need to be transformed into T-people— folks with a depth of knowledge on specific topics and a breadth of knowledge about how heritage conservation works. They also need to know that bosses will listen to cost-saving measures and potential money-making activities. This does not mean employees will be given free rein to do whatever they want, but they should be allowed to help make the company better under direction of their supervisors.
CRM PIs need to take off the blinders and think about the bigger picture. What does your company offer to society that is worth paying for? What do you want to see happen in your industry? What more can you do to make your community a better place? How can you make more money for your company? How can you apply success stories in other industries to CRM consulting? Are your peers in management working to live or living to work? These are serious questions that every CRM company owner thinks about that, I doubt, many CRM PIs are asking until they are forced to.
We will never eliminate layoffs in our industry, but we can do much to prevent them by smartly growing businesses and adding new revenue streams. Heritage conservation is one of the most beneficial ventures to local communities. It creates more jobs than new construction. Improves and differentiates local communities. Includes a broader demographic of professionals than most industries. Generates revenue for both businesses and local governments. Makes our cities more livable and sustainable. And, when done correctly, helps inform us about where we’ve been as a people.
CRM companies can learn much from historic property developer Bill Naito who turned the rehabilitation and reuse of old buildings in Portland, Oregon into a multi-million dollar business that outlived him. Naito’s projects anchored downtown Portland during the 1960s and 1970s when the district was in decline. He was a child of interned Japanese immigrants who, along with his brother, forged a pioneering real estate development company that has weathered several economic downturns.
Naito was a pioneer, but CRMers are in a position to do even better work because of our ability to use anthropological method and theory to create places that people want to experience while documenting local pasts. This work has a value that cannot be measured in dollars. Archaeology is just the tip of the iceberg. Heritage conservation is the future. It can also help end the feast and famine in CRM archaeology.
How can we end feast or famine in cultural resource management archaeology? Is heritage conservation the future of CRMarch?
Write a comment below or send me an email.
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