Running a successful architecture practice has become more challenging over the last few years. Prior to the global recession in 2008, the biggest headache facing firms was finding qualified and experienced staff to complete projects and keep the practice running smoothly.
Flash forward ten years… Today, though hiring is still a challenge, we can add to that list the fact that securing projects has become more competitive, and the design and build process is only growing in complexity. This is aside from the fact that engineering and construction firms have been encroaching on architectural turf by offering architecture and design services of their own.
Firms are getting squeezed from all angles.
While some mostly smaller studios have been adjusting to the new climate by altering their business models (and there is a growing pressure across the industry to follow suit) the transformation overall has been slow in coming.
Predictably, much of that resistance to change is happening among the bigger, more established names in architecture. Perhaps the principals at these firms believe they can afford to hold on to a few bad habits or that the cost of change is just too high.
But just like most bad habits, it will catch up with you at some point. Without making the effort to fundamentally update the way they operate and manage resources, they run the risk of being left behind. Already many of these firms are significantly limiting their ability to attract good clients, hire and retain top talent, and maximise profits.
That said, here are three of the biggest mistakes firms are still making today that when corrected can lead to a significant increase in profit margins, improve staff retention and performance, and aid in client acquisition.
1. Poor resource management. Concepts such as resource management often don’t get the attention they deserve, yet it’s impact is felt throughout the firm. Here are a few examples of firms not investing enough in the organisation and development of the resources at their disposal:
· Out-dated systems. I’m amazed at how many firms are still using technology developed more than 20 years ago. These out-dated systems are not taking advantage of the newer technology and ultimately leave the firm at a competitive disadvantage when it comes to project design and management as well as financial responsibility.
· Insufficient or inappropriate staffing. This happens when a team is not suitable for the project requirements, when members of the team don’t have the right skills or experience and are poorly coordinated. Often this results in a big gap between what the client is paying for and what the team is actually delivering.
· Inadequate training. Most project managers never receive the training they need in order to do their jobs effectively. Project managers are expected to handle a wide array of details including time and resource management, budgeting, and billing, and they must be experts in the systems used to support all of these processes. Yet, rarely do they get trained in many of these areas.
2. Hiring the wrong people. Many architecture professionals are ill-suited to their assigned duties. There are a few reasons for this.
Some architecture firms right now are stuck between two opposing forces when it comes to securing work: the drive to keep fees low and project schedules tight on one hand coupled with an increasing laundry list of “standard” services on the other. To help bridge the gap, the number of typical responsibilities that need to be shouldered on the job have multiplied, and many architecture professionals have started to complain that they are really doing the job of two or three people even at big, resource-rich firms.
Technology is also taking over some traditionally manual responsibilities- especially in the area of design.
In between all of this, most firms do not have real systems in place to develop, train and groom their top talent.
The professionals who “succeed” in this work environment are those with a breadth of experience (though not necessarily depth) who can multitask and can quickly do many things relatively well. Such desired qualities are affecting recruiting efforts. Instead of looking for long-term potential top talent, there is more focus being placed on a short-term quick fix: those who have the ability to churn out work. This may help firms to get through projects quicker and for less, but there tends to be a huge cost in work quality, the customer experience, and employee retention.
3. Giving in to unreasonable client demands. The urge not to say no to any work that comes through the door is an ailment that affects many practices big and small. Unreasonable client demands, such as wanting something in an unrealistic time frame or given an insufficient budget can put a costly strain on practices with not enough of a payback.
Exceptional requests should be built into the project budget. Period. If clients want something that goes beyond the norm, then they should be paying for it. Not doing so leads to overworked staff, smaller profit margins, lower employee morale, and less focus. Though the attitude may be that no client should ever be turned away, that the firm can handle the added expense and absorb the extra costs, it shouldn’t have to, and the truth is in most cases, it really can’t.
Above all, in business (and architecture is a business after all) there are no short cuts. When the market shifts and evolves, the firms that will be the most successful are the ones that know how and where evolve along with it.