The Architect's Guide to Small Firm Management

Making Chaos Work for Your Small Firm

Rena M. Klein

• Publisher: Wiley
• Year: 2010
• ISBN:
  9780470916858
• Edition: 1
• Topic: Architecture
• Subtopic: Professional Practice in Architecture

The definitive guide to management success for sole practitioners and leaders of small design firms

Owning and operating a small architectural design firm can be challenging, with tight project deadlines, on-the-fly meetings, rush proposals, and fluctuating workloads as part of the firm's day-to-day activities. To help small firm owners cope with the chaos and prepare for the unexpected, here is The Architect's Guide to Small Firm Management, a no-nonsense guide to repurposing daily demands into workable, goal-directed solutions.

Crucial topics such as self-aware leadership, people management, technology, financial health, scenario planning, sustainable practice, and future trends are examined using real-life case studies and business model paradigms. This definitive text explores the whole system experience of a small firm practice to deliver organizational strategies proven to keep a firm's creative mission on a steady, productive path.

The Architect's Guide to Small Firm Management addresses how small firm owners can:

• Deal effectively with unexpected circumstances and shifting work requirements
• Meet the demands of the marketplace while creating a satisfying workplace
• Set and achieve goals in an environment of constant change

This book is a must-have for those facing the often harsh reality of managing small design firms in a difficult and changing economy. Entrepreneurial architects and designers will discover how to define their own personal and professional meanings of success, as well as how to refocus their business approach to replace long, unrewarding hours with manageable, satisfying ones.

PART I

MANAGING IN AN UNPREDICTABLE ENVIRONMENT

CHAPTER 1

BRINGING ORDER OUT OF CHAOS

Managing a small design firm can be like running a three-ring circus. Anything can happen at any time. The action is unrelenting, demanding, and unpredictable. To keep it all in motion, many small firm owners work evenings and weekends on a regular basis. It is not unusual for these firm principals to spend their days “fire-fighting,” or scrambling to take advantage of a sudden opportunity.

Take the case of BB Architects. The principal there usually works 60 to 70 hours a week. Often he is in his office until eight or nine at night, he regularly works on weekends, and when he does go home, he takes work with him. He would like to spend more time with his friends and family, but the demands of his six-person practice seem to make that nearly impossible. For example, last week one of his project architects was out sick, and there was no one else but the principal to do the necessary work. At the same time—in addition to the usual work load—a great job opportunity arose which required that a quick proposal be written. This week, a project in construction is demanding immediate attention, the bookkeeper quit, and a major deadline looms. The principal likes his work and is stimulated by the pressure and variety, but feels vaguely like he’s on a treadmill, never advancing, even falling a little more behind each day. Often he’s just tired, and wonders how long he can go on this way.

Many principals in firms with fewer than 20 on staff will describe their work life this way. The work can be incessant and often challenging. Yet, most small firm principals are stimulated by the pressure and enjoy the autonomy, the control, and the opportunity for design expression. Nevertheless, there is often an underlying feeling of dissatisfaction and apprehension, working hard, but never sure what the future will bring. Constantly coping with day-to-day demands of projects, contractors, clients, and staff, while also running a business, can take its toll.

PROFIT AND SATISFACTION

Like the design of a custom home, the development of a small design practice presents the opportunity to create a firm that truly reflects the tendencies and proclivities of its owners. The organization doesn’t have to be conventional or rigid, but it could be if that was the nature of its leadership. Big firms are like big buildings—they need to be more formal and have well-defined structure to make them function. There’s less opportunity for personal choice and personal expression. Small firms are often able to maximize flexibility and creativity as long as they don’t get bogged down in a chaotic atmosphere, lacking organizational structures that foster effectiveness.

It seems almost self-evident that the skills firm leaders apply to their work as design professionals can be used to plan the development of their firms. The discipline of organizational design was derived from an understanding that it is possible to design organizations with processes similar to those used to design the built environment. Designing a firm means considering financial goals, purpose, size, optimal structure, and the best possible integration between the social systems and the technical systems of production.

Like all design processes, organizational design requires that design criteria be established. The personality, competencies, interests, proclivities, and aversions of the principals will be the primary source of these design criteria in small firms. External factors such as location, markets, and availability of skilled staff may also play a significant role, perhaps as design constraints. Of the criteria determined by the principals, the most important of these is how success and satisfaction in their work is defined. How important is financial success? How much money is enough? How important is name recognition and design awards? Does success include “doing good” for the local community? Does it include having a happy and cared for staff? How important is fun?

Naturally, satisfaction varies among design professionals and usually includes fair compensation, although that is often near the bottom of the list. Anecdotal evidence shows that many small design firm leaders derive the most satisfaction from working effectively with clients, consultants, and staff to deliver excellent projects. Most enjoy their freedom and the control of their work environment. Few enjoy the business aspects of running their firm and many are challenged by the frequent unexpected occurrences and never-ending demands. Figure 1.1 illustrates the interrelationship between profit and satisfaction in small design firm practice.

Again, based on anecdotal evidence, it is fair to say that in most architecture schools, students are led to believe their careers will reside in Quadrant 4—highly satisfied, but poorly compensated. Not to imply that this is always bad. There are noble organizations and design professionals who manifest this way of working without complaint, deriving significant satisfaction without the need for big paychecks. Nevertheless, there are many small design firm owners who undervalue themselves in the marketplace because of this low-pay expectation.

Figure 1.1 Small firm owners experience varying levels of profitability and satisfaction.

Unfortunately, there are also many design professionals who reside in Quadrant 3, not enjoying their work and not making much money either. This situation is usually a symptom of poor management and perhaps, lack of self-aware leadership—principals (and solo practitioners) who do not “walk their talk.” And, since much of the work architects and designers must do is tedious and routine, it is easy to understand how the work can become unsatisfying. Clearly practicing in Quadrant 3 is not sustainable and action plans for change should be considered.

Quadrant 2 isn’t much better. Leaders of firms in this quadrant are making good money but are still dissatisfied. Often these are skilled practitioners who are bored with work that once was interesting but now has become quite ordinary. These firm owners often create successful but somehow limited practices. Another common manifestation of Quadrant 2 are practitioners who lack a work-life balance. Many practitioners give up quality of life in order to make more money. This is as equally unsustainable as Quadrant 3, although it may be harder to recognize.

Most design professionals hope to reside in Quadrant 1—highly satisfied and well compensated. Many accomplish this by staying true to their interests, talents, and passions while acquiring knowledge that is highly valued in the marketplace. Firms that stay grounded in their values and vision as they grow, and create a culture of learning, have a better chance of succeeding in both satisfaction and compensation.

Organizational design is the means through which small firm leaders can chart a course to Quadrant 1. While the core competencies and dispositions of firm leaders are clearly the primary design criteria, the business model of a design firm is also significant. Being intentional about a business model, and understanding its staffing and managerial implications, is an essential aspect of bringing order out of chaos in small design firm practice.

DESIGN FIRM BUSINESS MODELS

In general, a business model is a plan that articulates what business is being conducted and how the business will make money. Well-known consultant David Meister¹ has identified three business models that are common in professional service firms. Each of these business models can yield growth and profitability, assuming that they are staffed and managed appropriately.

Design Firm Business Models

Efficiency

• We can do it better, faster, cheaper.

• We do projects that are not complex and have many repeatable elements.

• We employ more junior and technical staff.

Experienced

• We know what we are doing.

• We can do unique, complex projects by applying our accrued knowledge.

• We employ a mixed and balanced staff.

Expertise

• We have special knowledge or talent.

• We serve as expert consultants or are design stars.

• We employ mostly highly experienced staff.

Efficiency-Based Firms

The first of these models is known as “Efficiency,” illustrated in Figure 1.2. It describes firms that are focused on fast and less expensive project delivery. These firms often specialize in one project type or a narrow range of services and tend to serve clients that are looking for standard solutions and quick turnarounds. For example, a small architectural firm that serves residential developers might operate effectively within this efficiency model.

Because efficiency firms do projects with a significant amount of routine work, they can be staffed with a large percentage of junior or technical workers. With repeatable elements and standard processes, project delivery can be streamlined. Principals at the top acquire jobs and a small number of well-paid senior staff can organize the work and deal with the nonroutine aspects of the jobs. Profitability is dependent on volume and productivity and is relatively easy to obtain once systems are in place. Because there is more routing work and junior staff, the management style in efficiency firms is likely to be more directive and control based. Sustainable success in these firms requires continuous improvement of work processes and staying current with technology and trends.

Figure 1.2 Efficiency-based firms rely on repeatable processes.

CASE STUDY OF AN EFFICIENCY-BASED PRACTICE: SCHACHNE ARCHITECTS & BUILDERS

Stan and Donna Schachne of Schachne Architects & Builders in South Florida run a design-build firm specializing in residential remodeling, new homes, and light commercial projects. They are typical of a large number of small firms that base their practice on the efficiency model. Although the projects often are not routine, they are similar enough that it is possible to apply routine processes to their delivery.

For example, the Schachnes have developed a project delivery process that is repeatable with each new client. Based on the efficiency their process offers, the Schachnes can be unambiguous with their clients about what to expect. This process is clearly outlined on their website for potential clients to review before calling for an initial consultation.

Educated as an interior designer, Donna is integrally involved during all phases of the design. “She works well with our clients, especially the women, and provides a high level of customized service,” according to Stan, a licensed architect and AIA member. The couple typically works together on the schematic design for a project. Once the design concept and budget are approved by the client, Stan and Donna continue to collaborate on interior specifications and preparation of the construction documents. In keeping with the need for an efficiency practice to stay current with project delivery technology, the firm converted to Autodesk® Revit® in 2008 by hiring an expert user to teach Stan. Now, all the efficacy of 3-D modeling can be applied to the delivery of relatively noncomplex residential projects.

Soon after starting their business as a traditional design firm, Stan and Donna recognized the opportunity to offer general contracting services along with design. As explained by Stan: “It seems that in the South Florida market, people just aren’t into design. The residential market is mostly developer driven. We found that to design a small addition, we couldn’t charge more than a few thousand dollars, yet the construction cost might be over $200,000. So I thought, ‘Why can’t I be the contractor?’” The construction part of the business now earns most of the firm’s revenue.

As a result, Stan and Donna will often offer their design services as a loss leader, allowing them to demonstrate their competence and gain client trust before a large financial commitment is required. They see their design skills and their integrated approach as a competitive advantage in their market. Through the use of trusted subcontractors under Stan’s management, the firm is able to predict and control construction costs, and deliver a high-quality product to their clients. According to Stan, “We prefer doing small jobs because we find that we make more money. Small jobs are easier to control and involve less risk.”

Schachne Architects & Builders are a successful efficiency-based firm because they have specialized in noncomplex projects and have honed their project delivery processes to be effective and repeatable. They stay current with technology and trends which enables them to make money through high productivity (many small jobs) rather than high ma...