Designer Compensation: How Important is Money, Really?

September 26, 2005 · by Robert Smith

As the economy grows stronger and the range of new work expands, there is a renewed focus on the importance of attracting and retaining qualified staff. In the scramble to attract and keep top talent, compensation once again becomes a much-discussed topic for both employers and employees.

As the economy grows stronger and the range of new work expands, there is a renewed focus on the importance of attracting and retaining qualified staff.

In the scramble to attract and keep top talent, compensation once again becomes a much-discussed topic for both employers and employees.

People typically believe that compensation is about money, with employee benefits receiving serious, but secondary, consideration. For that reason, design firm managers tend to concentrate on staying competitive primarily in those areas. While both are important, salary and benefits should not be a firm’s only compensation administration consideration.

When making a decision to join (or stay with) a firm, most people sort through and try to prioritize a complex bundle of personal requirements. This “hierarchy of needs”—as originally conceptualized by Abraham Maslow (see illustration)—range from basic survival needs to the utmost psychological desire for self-actualization. Many of these needs do not relate directly to either salary or benefits.

Maslow’s hierarchy teaches that when an individual accomplishes each level, “satisfaction” won’t necessarily be the result. Rather, the individual is likely to start yearning for achievement at the next-higher level.

For example, once the individual obtains reasonable physical comfort (housing and clothing) and physical safety (money in the bank, home equity, life insurance), the next step might be to seek association with a prestigious firm. After reaching that milestone, the individual might aspire for professional recognition, and so on.

Of the various hierarchical needs described by Maslow, only some have a direct link to compensation. Clearly, money is a primary factor enabling the individual to meet physical needs. Money also is key in achieving safety and security, primarily in the form of adequate insurance and retirement savings. Even the need for prestige and status, as satisfied by a new BMW or a spacious beach house, requires substantial funding.

However, over the full range of Maslow’s hierarchy, the majority of other needs are NOT tied directly to base salary, bonus, or benefits. Rather, most of Maslow’s hierarchy addresses needs associated with work activity and the workplace itself.


The oldest design profession joke goes something like this: Q: So, Mr. Architect1, now that you’ve won a million dollars in the lottery, what are you going to do next? A: Well, you know, I’ve thought a lot about that. I think I’ll just keep practicing architecture1 until it’s all gone.

Were it not so close to the truth, that joke might be funny. Quite often, design professionals place professional considerations well ahead of their bank balances. See if any of these scenarios are familiar:

Each scenario illustrates the design professional’s strong motivation to reach the peak of Maslow’s hierarchy, i.e., self-actualization. Maslow illuminates the concept thusly:

“A musician must make music, an artist must paint, a poet must write, if he is to be at peace with himself. What a man can be, he must be. This is the need we call refers to man’s desire for fulfillment…”

While design professionals probably have no greater need for self-actualization than do individuals in other careers, self-actualization is a VERY important part of the design professional’s psychology. The idea that “a designer must design” has important implications for compensation administration and overall firm management.

The Funny Thing About Money

For years, I earned my living providing management consulting services to design firms. Often, when conducting a management audit at the onset of a new assignment, I would hear complaints about compensation levels. After researching actual compensation levels, I would find that the firm in question provided a highly competitive salary and benefits. More investigation usually revealed that complaints about money were concealing other, more troubling environmental deficiencies.

Money alone will not offset a bad working environment or the lack of true career opportunity. Employees rarely join (or leave) firms solely because of compensation or benefits. Using the lessons taught by Maslow’s hierarchy, managers of design firms must look to the whole firm and employment experience to attract and retain appropriate staff.

Non-monetary Compensation Can Involve Diverse Considerations

When conditions are right,employees derive non-monetary compensation from those aspects of the employment experience that provide value or satisfaction without necessarily delivering a measurable reward. Said differently, non-monetary compensation is nothing more complicated than “psychic income.” It rewards the employee in some uniquely psychological way, largely unrelated to salary or employee benefits.

A firm’s ability to deliver meaningful non-monetary compensation depends on the answers to some very important questions:

Every firm’s answers to these questions will differ, as every employee’s decision about what’s important also will differ. There are no abso-lute rules about “what’s right,” just varying degrees of appropriateness.

Non-monetary Compensation Also Involves Creating “Associations”
At a fundamental level, most design professionals seek to be associated with great projects, great clients, great designers, great teachers, and great colleagues. These associations address the individual’s need for identification with a successful group and the need for prestige and status among his/her peers.

Design professionals must be able to establish important career contacts, forge meaningful personal relationships, and perhaps most importantly, learn and grow from those associations. Non-monetary compensation typically promotes learning and growth and provides the opportunity to participate, develop a reputation, travel, and socialize.

The hierarchy links the search for such opportunities directly to Maslow’s self-actualization concept. Firms that ignore these needs will tend to have higher turnover and operating costs and lower motivation and morale.

In the End…

The essential question about monetary vs. non-monetary rewards is not an “either-or” question. The best firms endeavor to deliver both. In the end, every employee makes a subconscious calculation of the two:

monetary income + psychic income = total income

When available in reasonable quantities, psychic income helps the design professional see a clear path toward advancement and satisfaction. Most designers are able to make rational decisions about the trade-off between professional satisfaction and economic reward. Ultimately, most design professionals will choose the option that provides the highest “total” income.

Bear in mind, this is not an invitation to take advantage of your staff—you should always research the true market value for labor and compensate your people fairly. The goal is to deliver and maintain a reasonable balance between monetary and psychic income. In the end, firms that deliver both monetary income and physic income in a fair, and innovative manner will attract, retain, and develop quality personnel, keep them satisfied, and foster company loyalty.

Robert Smith, AIA, is a partner with Culpepper, McAuliffe and Meaders, Inc., in Atlanta, Ga.

Post Comment

The Talent Transition: 16 trends that will transform AEC recruiting strategies

Mar 23, 2016 · by Kerry B. Harding

Since its nascence, the practice of architecture’s success centered on the individual and collective talents of those who comprised the design studio. Read full »

The Status of a Design Professional’s Ability to Shift Risk — Trends or Outliers

Mar 23, 2016 · by Scott F. Fradin

On the risk-reward scale, it easily can be said that design professionals take on tremendous risk for little reward. Read full »

Cross Border Strategies are Changing

Sep 9, 2015 · by James P. Cramer

A destabilization of older markets yields new zones of opportunity Read full »

Sustaining Success Through Leadership Transition

Aug 26, 2015 · by Stephen Fiskum

Design firms that plan and implement successful leadership transition are well-positioned to build upon their legacies and achieve new levels of growth and success. Read full »

How Firms Succeed 5.0

Topics RSS Feeds on Twitter

Error retrieving Twitter status