MANAGEMENT FOR DESIGN AUTUMN RELEASE 2019
Managing Risk While Risk Management might not be the most engaging subject for leaders of Architecture, Engineering, and Design businesses, it’s an essential concern that you can’t avoid—and something you need to manage effectively. But, what does Risk Management actually mean? • Surrounding yourself with the right expertise • Adopting strategies and systems to minimise your risk and exposure. • Effective quality control to keep yourself free of unwanted claims Although this can be an extensive subject, we’ve simplified this by identifying the key issues most businesses encounter and categorised these into four main areas. 1. Business Structure and Legals 2. Clients, Fees and Fee Negotiation 3. Insurances
Business structures and agreements Business Structure Establishing a company, unit trust, or partnership is a decision you will need to make early on—and you probably won’t fully understand the implications of your decision until you are directly faced with them. Each structure has its pro’s, con’s, and implications for the owners and directors. What works for you may not work for others. A Unit Trust is different to a company in that the trust is not directly taxable on income it earns; however, all taxable income is distributed to the unit holders pre-tax, who then pay tax at their own rate. The workings of the unit trust are governed by the trust deed which is like the constitution of a company. Some of the disadvantages of a trust structure compared to a company include: • It can be more expensive to establish and administer • It can be difficult to dissolve, dismantle, or make changes once established • It can’t distribute losses, only profits And some of the advantages include: • Reduced liability, especially for corporate trustees • Assets are protected • Flexibility of asset and income distribution
Shareholder | Trust Agreement Why do you need this? A formal agreement prevents disputes. Having an agreement prevents disputes and allows for the smooth functioning of companies, trusts and partnerships. Disputes often arise when owners wish to sell or exit. It doesn’t matter how well you know the person you’re doing business with – conflict is extremely common when you’re doing business with someone. Having a shareholder agreement provides you with the opportunity to tailor a contract to your needs. Without one you will just have to work within broad legal principles which may or may not work to your advantage. An agreement is a private agreement. Unlike the constitution of a company, a shareholder agreement does not have to be made public. Also, only people or companies who are parties to the shareholder agreement can change it. An agreement can result in the smoother functioning of the company. Because the shareholder agreement can divide management functions and spell out rights/obligations it can have a useful secondary use as a kind of collaborative management tool. An agreement can save costs. The initial fees in setting-up an agreement is nothing compared to the costs of disputes or from bad deals which you might fall victim of in the future. When third parties know you have a shareholder agreement is a strong indicator that this is a stable business—this applies particularly when applying for credit and dealing with financiers.
What should your agreement encompass: • Ownership obligations and transfer of ownership • Insurances • Restraint (and upon exit) • Decision making • Other business interests • Exiting the business • % of profits linked to performance • Employee share plans • Buy / Sell Agreement
Comprehensive employment agreements with your people Employment agreements are an essential document for both employees and employers, legally establishing the working relationship and setting out important frameworks and policies. These contracts provide both the employee and employer with a clear agreement of what is to be expected from each party while outlining all rights, responsibilities, and obligations. This works to protect the rights of the employee, and also protect the employer from certain risks such as breaches of confidentiality. Here are five reasons why employment contracts are a must-have in any business: 1. Understanding of Employee Role and Responsibilities. One of the first things an employment agreement will do is clearly spell out the position and responsibilities of the employee, salary, and benefits. There’s nothing worse than stepping into a new role and not being quite clear on the tasks and duties involved. This should be established by the employer before the on-boarding process. Both parties should be clear around what is expected in terms of employee performance and this should include measurable criteria.
2. Understanding of Termination. The employment contract should specify exactly what actions can result in termination and the terms associated with this. Including this information ensures that each employee knows which activities are mandatory to their role and which actions or behaviours are outside policy and may result in dismissal. 3. Defined Pay Rates and Income. Regardless of whether an employee is full time, part time or casual, an employment contract defines pay rates and income and handling overtime. Having this information contained in one document shows an agreement between both parties on salary, leaving no room for miscommunication. Within the employment contract, you can establish the income your employees will be receiving and how often they work. You can also set what their annual income will be and any relevant bonuses, or basis for bonuses. 4. Clear Protocols for Annual, Personal, and Long Service Leave. Throughout their employment, team members will need to take all different forms of leave, such as annual leave, personal leave, maternity/paternity leave or compassionate leave. Having this information set out in a contract means that the procedure for taking leave is always consistent and legal, for all people. 5. Confidentiality for Employers. Many positions give employees access to confidential company information and data. A confidentiality clause in each person’s employment contract acts to protect the business. With this clause in place, employees are prevented from divulging sensitive or confidential information to others. This can include being released to the media or public, shared on social media, or being used for any other purposes. Employment contracts also often include a ‘non compete clause’ – a clause that prevents the employee from working for any competitors for a certain period (perhaps two or three years) after the employment ends. To continue reading this article please click here to view the full Business Journal online
International Women’s Day 2019 On the 8 March 2019, we had the pleasure of once again inviting our inspiring team and clients to the 2019 Women in Rotary’s International Women’s Day Breakfast, which celebrates the achievements of women, while discussing the remaining obstacles to full equality of opportunity, in all aspects of life. This marked the seventh consecutive year we attended this powerful event and share its insights with a group of successful, professional women. Once again, the event was truly inspiring with a fantastic panel of interesting speakers who proved to be both motivational and inspirational. As in previous years, we once again wanted to share some of our collected highlights and thoughts on the topics discussed, to continue to shine a light on this important issue.
We have a trust problem Years of inequality means that women don’t trust—more and more women need to put their hand up and engage. You can’t be what you can’t see We need to do something new. We all need to encourage more women to participate and to step up into roles—this is how change will happen. We need to shift the power by giving it up Th most educated and empowered generation is the current one—these are the leaders of tomorrow. Power will be re-distributed through struggle If someone’s behaviour is threatening —challenge this and have that uncomfortable conversation, even if you don’t know what’s going to happen.
Flexibility is key to keeping women in the workplace The concept of being physically in the office between 8:30am to 6:00pm will be a thing of the past in the next 10 years—companies need to get on board and innovate. Wear some gender lenses and have empathy Redistributed power shouldn’t be just good for girls and bad for boys. Stick together and keep fighting The Australian Economic Forum current statistics tell us at current rates it will take another 117 years to get to parity and achieve gender balance—we must not let up or give up.
Thank you to everyone who was able to share this engaging morning and I’m looking forward to more inspiring discussion in the future.
Introducing Rana Blair: Business System Effectiveness Evangelist
Management for Design provides strategic, financial, technology, and business management services that maximise the potential of architects, designers, planners, engineers, and other design professionals. Maximising your business potential is a combination of strategy, systems, and people—interwoven, they enable you to build your business and produce great design. However, there’s often a disconnect that prevents you from realising the benefits of the investment you’ve made in your systems. What’s going wrong and what can you do about it? We’re thrilled to announce that Rana Blair has joined our team. Rana brings over 20 years’ experience working to bridge the divide between potential and actual business performance, utilising proven methodologies and systems. Rana is an expert in how to best streamline and improve operations, by combining the power of business systems and behaviour change. Her extensive background, working with the top performing architecture and engineering businesses in the US and across the globe, provides her with a unique ability to provide project-based professional practices with firm guidance and expertise. She provides consulting services for clients looking to increase efficiency, utilising automation, documented processes, and effective communication. If you believe you’re using less than 50% of what your system offers, click here to contact Rana today and maximise your full potential!
Characteristics of all successful AED businesses What separates the average (and most) Architecture, Engineering, and Design (AED) firms from the most successful? Is it the design work? Their business processes? The personalities at the top? How are they able to consistently create great work, while growing their businesses, and achieving impressive profitability?
There are common characteristics across these leading and high performing firms that enable them to succeed where many others struggle. They are industry leaders that are dedicated to building relationships and they work selectively, allowing their expertise and skills to shine. It is the characteristics of leading architecture, engineering, and design firms that, not coincidentally, enable them to be the most commercially successful. They tightly control the design process and fewer people are involved Leading AED firms tend to have less (and not more) people involved in the design initiation process. Working with fewer people at the initial stages allows them to have tighter control of the design process. The central idea is strong, consistently applied, and clearly communicated to the client by the design initiators—a core group within the business. To borrow from Mies van der Rohe, “ less is more”. They focus on what they are great at Expertise comes with experience and talent—which doesn’t come overnight. Great AED businesses have clarity about their expertise and they focus on this. They concentrate on what they are great at. They don’t take on work that isn’t within their expertise and they clearly articulate and deliver their value proposition. They thrive in their specific niche.
They are very good negotiators The leaders of successful design firms are very good at negotiating—their opinions are considered and highly valued. Negotiations are reputable and more often than not, all parties feel respected, listened to, and satisfied with the outcome, whether that be a design, a project delivery, or business negotiation. Their negotiations strengthen their relationships.
They take on work on their terms High performing AED businesses are clear about the work they want to take on and just as importantly the work sectors and clients. They have a clear sense of the value they bring to a project; their point of difference and they are able to clearly articulate this to the marketplace. They don’t pursue and take on work with clients that don’t share their values. They don’t negotiate on price. They are sought out by the marketplace Successful AED firms have a value proposition that sets them apart from most. They are sought out by the market place due to the reputation of their leaders, their expertise, their ability to collaborate and innovate, and their relationship skills. Due to their demand, these companies become very valuable. They charge more than others Successful design firms are typically more expensive than others. They are commercially astute but understand clearly the value they bring to their clients and to the project. They focus on communicating their specific expertise, innovation, and their unique value proposition—so that the client understands the flow on benefits to the project and their business. They’re not reducing their fees.
They surround themselves with business expertise Successful design firms surround themselves with experts in business. It’s their team. Whether that be across strategy, finance, IT, BIM, project delivery, contracts, mentors, or systems. By surrounding themselves with business expertise, the leaders are able to focus on what they are great at—design, generating work, and client relationships; and they are constantly learning from these experts. Their clients love working with them Clients love working with these firms. The client experience across all touchpoints is compelling—client service is paramount and this culture flows throughout the entire business. They partner with their clients to build mutually beneficial relationships to deliver outstanding work. They attract the best and brightest people—and they retain them One of their core capabilities is their ability to source and entice the best and brightest professionals and then to develop and retain them. People are at the core of what they do. They provide fulfilling challenges, flexible working conditions, and clear paths to leadership. For them, it’s about people, not buildings. The leaders focus on client relationships, winning work, design, and representing the business The leaders concentrate on building and maintaining close relationships with clients, winning reputable work, developing designs, and representing the business to the best of their ability. The leaders as a collective are across all elements of the business—the “business drivers”. However, they certainly aren’t intimately involved—there are others in the business that have this covered. They don’t complain about the industry because they are winning Their businesses are thriving, they are producing outstanding work, they are surrounded by talented people, working with good clients and they are commercially successful. What’s to complain about! For them, the industry is exciting and compelling. They don’t compare themselves with others Because these businesses are winning, they’re not interested in comparing themselves with others—forget benchmarking! They are achieving their aspirations, well respected and sought out by the industry. They are outward looking, seeking worldwide industry trends and innovation. But they pay minimal attention to others in their space.
They provide above average remuneration These businesses have talent and they reward their people accordingly. That sets the benchmark across the organisation. Team members are valued and remunerated for the value they bring to the business. They provide above average remuneration. They’re clear about who they are and where they are heading Successful AED firms have an unclouded vision of why they do what they do. The leadership is aligned with this direction and hence this flows throughout the entire business. It’s articulated and communicated regularly. They are focussed and driven by this purpose and where they are heading. And it’s not necessarily to conquer the world. It’s to be the best at what they do. Their consultant teams are of a similar ilk Successful architecture, engineering, and design firms associate and align themselves with equally successful professional consultants. When they come together as a team, they are consultative industry leaders. They work with the best, in order to operate at the top of the industry. And they don’t talk about it. They get business Although the leaders are focussed on what they are great at—client relationships, design and delivery, and generating work, they are somewhat surprisingly educated and informed about most business matters. And that may be across, commerciality, fees, contracts, the marketplace, financials, or people management.
Do you want to achieve a greater level of success? Management for Design is your essential business partner, to enhance your performance. Refocussing your way of working means you’ll spend less time micro-managing, while the key decisions will always remain firmly in your hands. For more information, contact Rob Peake on rpeake@m4d.com.au.
Association of Consulting Architects Australia Webinar Series
Management for Design Director, Robert Peake, recently just concluded a twopart webinar series with the Association of Consulting Architects Australia. Servicing clients and delivering projects are key to the success of an architectural practice, but attentive, ongoing practice management is equally important. Unfortunately, many architects neglect the sometimes complex day to day running of the business to focus on the more enticing aspects of architecture. By popular demand, Robert as invited back to ACA Insight, with an updated presentation of his very successful ‘Business of Architecture’ series originally delivered to their audience in 2015. Over this two-part webinar series, Rob shared the 10 foundations required to build a successful, sustainable architectural practice. Rob unpacked and explained the complexities of business management, focusing on the main elements that make up an architectural business – people, strategy, business and financial management, brand, systems, delivery, risk management, marketing and communications, and the all-important succession planning.
For more information on this series, contact Rob Peake on rpeake@m4d.com.au.
A/E/C Strategic Planning: Executive Survey Report by PSMJ A/E/C principals who think of “plan” as a noun tend to write a nice neat document, tuck it into a three-ring binder, and let it gather dust on a bookshelf while they make day-to-day decisions and react to events with little or no thought to a long-term direction. Think of “plan” as a verb instead—something you do all the time, tending to it at regular intervals—a process that never ends—an ongoing part of your proactive approach to the marketplace and to running your business. The best strategic plans share these attributes: — Simplicity — Clarity — Measurability A strategic plan is your carefully-considered written description of where your firm is going and how you will gain competitive advantage by capitalizing on its unique capabilities. It accomplishes the following: — — — — —
Identifies what you bring to the marketplace to provide value for clients. Presents a specific vision of what your firm will look like in the future Establishes measurable firm wide and operational long-term and interim goals Defines the strategies that will achieve your goals. Assigns responsibility and accountability for making it happen.
A strategic plan is not: — — — —
A budget An operational plan A list of tactics A one-time event
Underscoring that importance of “plan” as a verb rather than a noun, we wanted to better understand some of the latest breakthrough strategies and tactics that A/E/C firms are using to get results from their strategic planning. We wanted to find what works and what doesn’t. Click here to read the full report prepared by PSMJ | Resources, Inc.
Reading List Federal Budget 2019-20: A middle-market perspective Prepared by Pitcher partners Federal Budget 2019-20 A middle-market perspective
Prepared by Pitcher Partners 3 April 2019
The Government is firmly in election mode, spruiking its perceived Budget winners and its economic credentials. The question remains, will this be enough to sway the Australian electorate, and overhaul the 5% deficiency in the current polls? Click here to read the full white paper
Design Management for Architects Stephen Emmitt This unique guide helps architects improve their management skills by addressing the relationship between the management of the design project and the design office. The author demonstrates how a professionally managed project, conceived and delivered within a professionally managed office ensures that client values are translated into construction without loss of creativity. Impact 2030 PSMJ | Resources, Inc. Predicting how client demands, design techniques, environmental conditions and financial forces will change over the next decade? In a fluid and dynamic industry like A/E/C, that’s a challenging exercise. Click here to purchase the full report
Why Architects Matter Flora Samuel Why Architects Matter examines the key role of research- led, ethical architects in promoting wellbeing, sustainability and innovation. It argues that the profession needs to be clear about what it knows and the value of what it knows if it is to work successfully with others.
Rise & Resist: How to Change the World Clare Press Rise & Resist takes a wild trip through the new activism sweeping the world. The political march is back in a big way, as communities rally to build movements for environmental and social justice.
