Many of those in an ownership position are asking themselves, “What’s it all for?” Scott Simpson talks about what it takes to become and stay fulfilled.
At a time in our practice when principals are working an average of 70 hours a week, cutting their bonuses to make up for inefficient project managers whose projects have soared over budget, and being required to manage, market, network and manage and serve as referee, therapist and parent, many of those in an ownership position are asking themselves, “What’s it all for?” Scott Simpson of Boston-based Stubbins & Associates, talks about what it takes to become and stay fulfilled.
One of the myths about being an architect is that once you make principal, your troubles are over. As a boss, you expect loyalty and obedience from subordinates. As a professional leader, you expect a certain deference from consultants and clients. As a citizen, you expect the respect of the community at large. (And around the house, no doubt your family thinks you leap tall buildings with a single bound.) The truth, however, is quite different. None of these things happens automatically just because you get a new business card.
Making principal means that your life gets harder, more complicated, more hectic, more challenging. This is because your responsibilities have increased exponentially. Instead of being concerned about a single project or client, you are now expected to be a provider, creating new work for the office, mentoring the staff, and producing results for your clients, not to mention keeping the bank happy by covering payroll every two weeks. Make no mistake about it–being a principal is hard work. And it should be. It is a position of great responsibility, and it carries commensurate professional, financial, and psychic rewards.
Becoming a principal is one thing. Maintaining the energy, commitment and enthusiasm that got you there in the first place is quite another. In sports, it is very common for a championship team to have an off season the following year, because the emotional and physical energy that are required to win are even harder to sustain. The same thing is true in architecture. It is not uncommon for principals in firms, especially those nearing retirement, to do a little coasting. After all, they’ve earned it. Shorter work weeks, longer vacations, and longer lunches become the norm rather than the exception. While it is certainly true that exceptional performance should have its rewards, it is very dangerous for the firm to allow anybody to slack off. This is especially true of principals, because they set the tone for the entire organization. If the principals are not giving their all, who will?
How do you make sure that the principals in your firm continue to perform at the peak of their ability? How do you make sure that a partnership is not a sinecure? How do you keep the fire in the belly from going out? The answers to these questions are complicated by the fact that design firms are often as much a club as a business. Partnership is not only a measure of professional achievement, it is also an affinity group, like a basketball team or a posse. Each member is likely to bring different skills and attitudes to the mix, and establishing equal performance measures for all can be dangerous. At the same time, ignoring principal performance measures is asking for trouble–no one, not even the president or CEO, should assume entitlement or tenure. For when a firm loses its momentum, it is exceedingly hard to recapture.
Obviously, the most important time to discuss principal performance is when new partners are brought in. This is an opportunity for the entire group, not just the new blood, to consider what it means to be a firm leader and to renew their personal commitment to the overall success of the office. The key here is to focus not on what you get, but what you give. In some ways, this is like the difference between Christmas eve and Christmas morning. When we were kids, we got to open the presents. When we become adults, we have to make sure they’re wrapped first.
While every firm is different, there are some standards that can be reasonably applied to measure principal performance. The four critical success factors in any firm are marketing (creating new work), professional services (creating and producing design), operations (providing for a productive working environment), and finance (counting the money). Some firms are driven by marketing, some by design, some by technology, and still others by profitability, but each and every successful firm will need leadership in all these four basic areas in order to thrive.
Firms that are not sole proprietorships should average one principal for every ten to twelve staff members, and at least $100,000 in gross fees per staff. On this basis, a principal can be reasonably expected to produce not less than a million dollars in new fees annually. In larger firms, with more sophisticated marketing support, $2 million per principal per year is a very reasonable goal.
On the professional side, principals should be expected to produce their projects on time and on budget, setting an example for others, and performance can also be measured by numbers of design awards won, numbers of projects published, and amount of repeat business generated by satisfied clients. In operations, whether or not the principal is involved in direct firm management, teambuilding, training of younger staff, and attention to routine details such as filling out timesheets and checking project reports are minimum standards. Principals should always support firm management, and be alert to new ideas about how to run the office more efficiently.
Finally, in finance, it is easy to measure project performance. How many dollars of gross fees were billed in a year? How much in net fees? What were the profit margins on specific projects? What is the average utilization of principal time? How much overtime? And here’s an interesting one–what is the ratio of new fee dollars generated per dollar of salary? Without being punitive, it is easy to tabulate these results for all principals in the firm and then compare them on a year-to-year basis, looking for trends. The numbers themselves won’t prove anything. (It was Mark Twain who said that there are three kinds of lies–lies, damned lies, and statistics.) But at the same time, objective measures of principal performance are hard to deny. Use them for enlightenment, not punishment.
If your firm tolerates less than full commitment by its principals, everyone gets sold short. This includes not only internal staff, but your clients, consultants, and contractors as well. As principals near retirement age, their interests and value to the firm may change–it’s perfectly understandable. When this happens, don’t get mad. Instead, get creative about re-structuring their involvement so that you can take advantage of what they can offer, but without the baggage.
In short, being a principal is both a privilege and a responsibility. Provide one and demand the other.