How Firms Can Benefit from Hard Times

By Rena M. Klein, FAIA

Many architecture firms grow and shrink along with the economic cycle, never breaking out of the up-and-down pattern dictated by macro conditions. Firm leaders who see the downturn as an opportunity to reshape their firms can position themselves for growth and financial success when the economy recovers.

To benefit from a downturn, firm leaders must have a vision of what they want their firm to be when the inevitable recovery occurs. Along with optimism, success in a slowdown requires imaginative strategic thinking. And, as the pace of work slows, time becomes available for reflective thought, work process improvement, and overdue professional development.

Be What You Want to Become

A firm can position itself for a strong recovery by having the ability to change and reinvent itself. Although a downturn is not a good time to enter new markets, it is a good time to expand professional skills and knowledge, and to research new possibilities and directions. Firms that succeed use “found time” to craft long-term strategies and implement long-needed changes.

While unfortunate, the necessity of lay-offs provides firm leaders with the opportunity to let their weakest staff members go. When staff reductions are accompanied by a rethinking of organizational structure, firms can set themselves up for growth and a robust recovery.

Once long-term vision, goals, and action plans are understood, there must be commitment. Getting a firm ready for the recovery, as well as sustaining during the downturn, takes discipline and actions such as monitoring financial performance, reviewing process effectiveness, and sometimes, implementing significant systemic change. Because architecture firms are project based, project delivery is often the first system that should be examined.

In many architecture firms, partners are the primary project managers. Partners do all the client contact and project tracking; all information flows through them; and they are the main decision makers. Not surprisingly, partners in these firms frequently work long hours and complain about not having time for design or firm development.

The Pyramid Problem

The project management model used by these firms is known as a pyramid structure. Partners, at the top of their pyramid, often become a bottleneck in the production process, causing delay and wasted effort. Because partners are frequently gone from the office, critical information can be missed and last-minute design changes may be common. If a partner were to disappear completely for some reason, much critical knowledge would also disappear, debilitating the projects and the firm.

As a downturn looms, firm leaders who use a pyramid model may find it hard to turn their attention to management tasks required to navigate through tough times. Even though they know they should turn their focus to outreach; to tracking backlog, cash flow and other financial metrics; and to assessing staff effectiveness, the demands of current projects make this very difficult. Strategic thinking is put on the back burner and short-sighted decisions are sometimes made as attention moves from one fire-fight to the next.

The Matrix Solution

In the matrix model of project management, professional staff members other than the partners are the primary project managers. In addition to giving the principals more time for marketing and firm development, it gives selected employees more of the billable work. As workload declines, this can make a real difference in being able to retain highly valued staff.

When a talented staff member assumes a project manager role, he or she is given responsibility and challenge, inevitably resulting in increased commitment and enthusiasm. The partner in charge of a project can then support the project manager with mentoring and quality review. Some partners will also serve on the project team as the lead designer or technical expert.

By letting go of project management, firm leaders are able to focus on work that enables the firm to sustain itself, even through troubled times. In addition, it introduces a systemic change that can result in higher productivity and employee retention. Even in a firm of two people, one owner and one professional employee, a matrix model can be applied, freeing a sole proprietor to focus on market development.

By transferring project management from partners to staff architects, firm leaders will also position their firm for growth when the economy recovers. In a pyramid model, growth is only possible by adding more pyramids (partners) but growth through adding pyramids is limited. Although the firm may get bigger, it is unlikely it will be more profitable, more productive, or more innovative. By moving to a matrix model, growth is enabled because the partners are freed to do what only partners can do—network, acquire projects, and set new directions for the firm.

Transforming Mental Models

Although the pyramid model often causes overwork and significant stress for firm leaders, many will tell you it is easier to manage projects themselves than to trust anyone else. They fail to understand the power of mentoring instead of managing, delegating instead of doing, and trusting instead of controlling.

In a downturn, if partners hold onto work that other staff members could be doing, they risk losing valuable staff, narrowing firm capabilities, and limiting time available for seeking new projects. Transforming mental models about “who should/could be doing what” is as important to a firm’s success as changing the project management model, and the two shifts need to support one another.

Changing these mental models is likely the most difficult aspect of this process. It has been said, “Our habits are our destiny.” In most firms, the habits of the principals substantially influence every aspect of firm operations. These habits, good and bad, often become entrenched organizational patterns, copied and deepened by the staff.

Facing the weaknesses of an organization (and its leaders) and working toward improvement has huge potential for positioning a firm for growth as the economy recovers. For a firm to develop, firm leaders must learn to trust and support the intelligent people they have hired. A slowdown may be an opportunity for firm leaders and staff members to become allies in a common cause – all working together for the good of the organization and the vision they share. Holding a firm retreat during slow times may be a way to foster and tap into that commitment.

Conclusion

It’s not hard for most designers to envision a preferred future, but actually taking the steps to get there may be another story. Uncertain times can provide unexpected opportunities to ready a firm for growth and prosperity once the economy recovers. It is a process that takes discipline, personal commitment, alignment of purpose and a willingness to change. To succeed in a slow economy and emerge with renewed strength, firm leaders may need to reinvent themselves along with their firms.

Rena M. Klein, FAIA, principal of RM Klein Consulting, provides assessment, strategy, and management coaching to leaders of design firms.