3 Practice management David Littlefield Architectural writer Director of architectural IT firm Evolve Consultancy
KEY POINT: Staff are the most valuable asset of any architectural organisation
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Contents 1 Introduction 2 Recruiting and managing staff 3 Administration 4 Income 5 Heirarchy
1 INTRODUCTION Managing and maintaining an architecture practice is a demanding enterprise, requiring sound administration and management skills as well as design acumen. Practices need to take notice of employment law as well as building codes, and financial imperatives are just as significant as aesthetic ones. Finally, computing has revolutionised the practice of architecture over the last decade.
2 RECRUITING AND MANAGING STAFF 2.01 It has long been a cliche that staff represent the most valuable asset of any business. That is true if you have the right staff. Do not employ an architect if you need only a technician. Employing architects merely through force of habit can lead to frustrated employees and needlessly inflated wage bills. It is not unheard of for a successful architectural practice to employ twice as many technicians as architects. 2.02 Consultants, contractors and agency staff Taking on staff is a major undertaking, and many architects prefer to stay small simply to absolve themselves from the responsibility of it. One option is to engage people as consultants, which both simplifies and reduces the tax overhead; also, this style of employment allows a business to test someone out before offering them a full-time position. Contractors are particularly useful to help practices cope with sudden workload bulges, and recruitment agencies are only too happy to supply them; however, charges for agency staff can be considerable – 10–15% of the first year’s salary. 2.03 Legal responsibilities Employing staff also brings legal responsibilities; bodies such as the Chartered Institute of Personnel and Development and the website www.compactlaw.co.uk are helpful in this regard. Briefly, employers need to abide by legislation governing equal opportunities, working hours and employment protection. Working Time Regulations place a ceiling of 48 h on the working week, unless an employee declares in writing that they wish to work beyond this limit. Furthermore, the Employment Rights Act (1996) opens employers up to heavy financial penalties if they are found, by Employment Tribunals, to be in breach of the law. Unfair dismissal, for example, can cost an employer £55,000. The simplest way to deal with the law is to be fair and transparent in all employment-related matters. Recruitment decisions should be seen that they have been taken against clear and
objective criteria; and the same applies to cases of dismissal or redundancy (‘last in, first out’ was once seen as a legitimate policy, although the outlawing of age discrimination has brought this into question, as ‘last in’ might also be the most youthful). Put everything in writing. Provide employees with an unambiguous contract of employment which includes the following: rates of pay, working hours, holiday entitlement, disciplinary procedures and a job description. Importantly, seriously entertain the idea of introducing flexible working practices if an employee makes a request. 2.04 Employee satisfaction Beyond the legal contract, there is also the ‘psychological contract’ – an unspoken agreement about the expectations of employer and employee. This can include rather subtle expectations – hopes of stimulation, satisfaction, a creative environment, early responsibility, career advancement and so on. A mismatch between expectations and reality can cause resentment, low morale and high staff turnover. 2.05 Practice management Large practices employ their own full-time personnel specialists, but this will be beyond the means of small and medium-sized firms. Any practice beyond the size of three or four people will benefit from employing a part-time practice manager, even for just one day a week. 3 ADMINISTRATION 3.01 Administration – covering everything from invoicing, timesheets, payroll, archiving and contact management – is crucial the efficiency (even profitability) of any architectural practice. The signature of a good administration system is being able to conduct an ‘audit trail’, which means being able to find out who did what and when they did it. 3.02 Information management A database of key project information is essential. Once in place, the database can help a practice quickly assess itself against a range of key performance indicators: cost-efficient projects, profitable sectors, productive teams, reliable suppliers and so on. Also, databases allow a practice to rapidly put together a bid for work; by retrieving data from past projects, a convincing, detailed and customised document can be delivered within a day or two. Importantly, different administration systems should be integrated as far as possible. Larger practices have invested huge sums in systems which bring together drawings, document templates, supplier information, project management stages and even payroll information. The result is that practices develop an efficient and predictable way of working, that they can easily prove their value to a client, that invoices are chased when appropriate and that official documentation is written to pre-determined standards. 4 INCOME 4.01 Fee structure Every practice needs a fee structure. Fees are generated in one of two ways, either as a percentage of contract value (a figure which 3-1
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diminishes as the value grows) or as an hourly rate. Generally, practices will charge different amounts according to the level (and perceived value) of staff, and there will be a sliding scale covering partners/directors, senior associates, associates, job architects and students. Fees may also vary to match the job.
4.02 Negotiating fees When negotiating fees, never feel sorry for the client, even if you like them. If a client likes the quality of your design, or even just your general approach, the chances are they will pay for it. Fees are only a very small part of the overall cost, which is worth pointing out if fees become the subject of negotiation. Generally, domestic clients negotiate less than commercial clients. Unless it is your first job and you need something for your portfolio, there is little point in reducing your fees to a level at which the job becomes unprofitable.
5 HEIRARCHY 5.01 Unless a senior-level architect wants to become a full-time manager and keep only a passing interest in design work, they need to hand the responsibility for day-to-day administrative matters over to specialist staff. In medium to large practice, specialists are employed to handle technical issues such as office management, human resources, marketing and IT, leaving directors to look for new business, handle clients and oversee design output at a strategic level, via regular design reviews and corporate crits. Directors of large practices may spend no more than 25% of their time on design-related matters.
5.02 Pyramid structure For most practices a traditional pyramidal hierarchy provides a structure which, as well as fostering both stability and certainty, can survive periods of growth and contraction relatively intact. The whole point of a hierarchy is simple; it is there to facilitate the efficient running of the business, not to indulge the ambitions of individuals. The further up the hierarchy one moves, the more strategic the role. Terminology may vary but, broadly, this means installing a board of directors, including a chairman and chief executive. There may even be a non-executive director or two, someone from outside the industry who is recruited to provide advice rather than assume management responsibilities. Ideally, each director will assume responsibility for a specific issue (HR, IT, etc.) to which full-time specialist managers will report. Well-qualified, non-architectural support staff, like HR (which covers functions like payroll, recruitment, employment policy, training and equal opportunities) might well be taken on at fairly senior level, especially if these employees are to be given some sort of strategic voice.
5.03 Flat management structure The alternative to a centralised pyramidal hierarchy is the flat management structure, perhaps even comprising equal partners who manage their own affairs, recruit their own staff, bring in their own work and pool their earnings. This brand of practice will have no single voice or leader. The danger with flat management structures, however, is that decision-making can be slow and frustrating, and there is less clarity about where the buck stops. Also, practices which operate in this way need to recruit/coach a special breed of person, someone who is competitive enough to make it to the top table, but restrained enough to resist the temptation to dominate.