Since its nascence, the practice of architecture’s success centered on the individual and collective talents of those who comprised the design studio. With the advancements of modern management theory, non-design professionals augmented the firm’s talent pool to increase profitability and expand both market share and reach. Technology, burgeoning national wealth and inter-border trade initiatives created a more global marketplace for American design services, whose success was, as always, contingent on finding and keeping the right people.
Each new fiscal year brings to the design community unique challenges the result of which mandates tweaking previous strategic planning initiatives. Whether they relate to diversity, market share, new market penetration, ownership transition, or increasing profitability and shareholder wealth, achieving target objectives all stem from one common root: talent.
From its inception, DesignIntelligence has existed to help design firm thought leaders better anticipate and respond to trends in the marketplace through careful research and thoughtful analysis. After interviewing a diverse cross-section of human resource professionals, executive recruiters and academic placement staff, this author identified 16 key talent trends crystallized into four major categories.
Market Forces Trigger Responses
1. Fluctuations in the global economy are triggering fear-based staffing responses.
With memories of the economic free-fall of Autumn 2008 still fresh enough to be scary, firms who have put all of their eggs into China’s basket or those of the once oil-rich nations of the Middle East saw January usher in multiple project postponements and even cancellation of key projects in the design phase. One global firm who was recruiting multiple senior project executives in the more rapidly developing Chinese provinces cancelled the searches and, in even one case, intercepted an offer letter that was being FEDEXed to a candidate for acceptance.
2. Turmoil in the domestic financial markets slows institutional hiring.
On the domestic front, the almost 1,000-point drop in the Dow during the first part of the 2016 dramatically reduced the net value of appreciated stock donated to fund institutional health care, academic and cultural projects. As a result some of these which were just entering the design or construction bid phase have been temporarily tabled and their production staff, idled to conserve cash flow. Also, mergers in the pharmaceutical, health care, retail and corporate arenas are eliminating five-year capital improvement programs and the announcement that major retail chains such as Macy’s, Wal-Mart, Kohl’s, Sears, Kmart, Penny’s and others are closing hundreds of underperforming stores will have a trickle down effect later this year on those firms specializing in retail rollouts as bargain-priced existing shells hit the real estate market.
Carrying unbillable staff and their associated overhead costs in hope of a quick fix or alternate project win to transfer the team to may have been the way business was done in the past but, for most firms already operating with razor-thin profit margins, it’s not anymore.
3. A/E firm mergers and acquisitions will increase, not decline.
Last April, Architect magazine reported that 78 percent of architectural and interiors firms stated that their five-year strategic plan included either a merger or an acquisition. As firms attempt to enter strongly performing geographic and target markets, they are finding that experience — the barrier to entry — can be mitigated through adding one of the recognized players in the field to the fold. Recent mergers such as Nebraska-based DLR Group with Washington, D.C.-based Sorg Assocates; East Coast powerhouse RTKL with West Coast powerhouse Callison, HOK’s acquisition of 360 Architecture and AECOM’s final integration of URS this past December are just a few past examples of the kinds of future marriages the industry will witness by the end of the year.
4. Free-lancing, contract positions expand to fill project teaming demands.
The appeal of remote work is growing and individuals who value work-life balance over career and financial stability are stepping into key assignments. One talented senior architect specializing in sustainable design left a top management role at an established firm and now consults exclusively on a wide variety of projects around the country. “I used to spend hours each week in meetings discussing things like health insurance, 401(k) plans, reprographic contracts and underperforming market sectors. I didn’t even feel like an architect anymore. Now, I do what I want. I have more time with my family and I bring home a lot more money than I did before.” Firms like Archipro, Aerotek and Aurstaff are just a few of the architectural staff firms in the United States marketplace who have transitioned from lower-level production help to senior, specialized experienced professionals to augment full-time professional staff at a substantially lower overall cost.
5. Workplace demographics are undergoing a dramatic shift.
Known as the “brain drain” by many, this year thousands more baby boomers will leave the industry as a result of retirement (forced or voluntary) or obsolescence generated by the aggressive mergers and acquisition movement. According to US Politician, 10,000 people from the baby boomer generation now retire every day. According to U.S. Census data, it is estimated that approximately one third of the A/E workforce is over 55 and that number is expected to increase by 47 percent in the next 15 years. With their exodus from the profession goes an incredible amount of technical, institutional and cultural knowledge for which most firms don’t have established knowledge transfer programs in place. While millennials aspire to leadership positions but lack the experience, we can expect corporate organizational structures to accommodate the change.
6. Young professionals are entering the workplace faster.
On June 29, 2016, NCARB will implement its complete overhaul of its Intern Development Program (IDP) which consolidates 17 core experience areas into six practice categories that expedites the path to licensure for new graduates, enabling them to undertake more substantive responsibilities earlier in their careers than before. NCARB also announced plans to let a select group of institutions let M.Arch and B.Arch students complete IDP requirements and take the Architectural Registration Exam (ARE) 5.0 before graduation, a process that previously took two years after graduation to complete. According to NCARB, the organization will establish a committee that will guide the selected schools in the implementation process and work with state registration boards and jurisdictions to ensure that laws and regulations are in place to grant access to the ARE.
7. Diversity and diversity awareness increasing in importance.
In 2000, 25 percent of those who completed the IDP were women, compared to 38 percent in 2014. More established firms are proactively looking to increase the number of woman in their management ranks, especially at the C-suite level; one recent example is Perkins+Will’s announcement that a female CFO will replace her retiring male predecessor. Author Lydia Dishman says, “Diversity generates new ideas, creativity and innovation, but it’s important to find the balance between people who are disruptive and those who simply bring different points of view. Successful organizations are populated with those who go above and beyond because they like and believe in the company regardless of gender.”
Racial and ethnic minorities are up from 22 percent to 41 percent in just seven years. More important, SCOTUS’ legalization of same-sex marriage and federal mandate of related legal and financial benefits has resulted in firms whose benefits packages haven’t kept pace with societal changes losing out on top young talent for whom these issues can be deal-breakers when evaluating firm offers. Complicating the diversity arena is the uncharted territory surrounding the accommodation of transgender candidates and, as a precautionary measure, savvy firms are adding “gender identity or expression” to its EO nondiscrimination policy — prohibiting not only discrimination, but also harassment, in its EO policy or a comparable document and ensuring that “gender identity or expression” is included in lists of reasons not to discriminate or harass workers.
8. Young(er) professionals are looking for more than money.
Referred to in the business press as “The Millennial March”, a research study by PWC revealed that, by 2020, Generation Y will make up 50 percent of the work force. These tech savvy professionals have grown up computer proficient and expect to be recruited, onboarded and evaluated through social programs and mobile software applications. Anecdotal evidence reveals that millennials have shorter spans than Generation X or baby boomers; accept opportunities to learn and grow then move on; trend toward smaller, more personal firm environments and seek firms whose values and culture more closely align with their own.
Now entering the workforce is Generation Z— those born between 1990 and 1999. According to one pundit, “If you thought millennials were babies, wait until you meet these youngsters, who are roughly the same age as the reality show, ‘The Real World.’ They may be green but they’ll bring fresh skills to the workplace.” Generation Z lives in a world where they need more than two devices to stay connected, are speedy communicators and are ready to be productive. More importantly, they are looking to make a difference.
What do HR professionals need to know to effectively recruit Gen Z-ers? They distract easily. They multi-task well and are adept at the transition between digital tools. They use some sort of app for everything in their life — including job search and savvy firms are developing recruiting strategies that are rooted in both social media and cell phone mobility. A variety of applicant tracking systems have hit the marketplace to help A/E firm recruiters better identify sourcing for potential candidates and past applicants.
Z-ers are more visual. They are used to six-second Vine videos, Snapchat messages and 20 character Twitter posts. Their technological proficiency mandates that recruiting initiatives be mobile for applications, videos, blogs and social updates. Brochures? Too cumbersome. Websites? Too slow. Z-ers are collaborative. They prefer interpersonal connection. They want to know their coworkers, managers and leaders. Send them texts for interviews and follow up, as well as invitations to the firm’s LinkedIn, Facebook groups/pages and firm blogs. While live video interviewing is gaining popularity as a way to reduce recruiting expenses, talented Z-ers want to meet and see if a connection results. Think of recruiting Z-ers as speed-dating for business.
Continuing technological advancements are transforming not only the way talent is identified, recruiting, hired and retained but is enhancing the breadth and reach of the talent pool.
9. Workplace portability is creating more hiring options.
For a while now, technology has allowed most work to be done remotely but technological advances are allowing even more work to be done away from the office. Video technology is one specific area that results in greater opportunities to have flexible schedules. During the recent mammoth blizzard that hit the Eastern Seaboard, one firm executive did not miss one single meeting thanks to Skype, Facetime and GoToMeeting. Also, Cloud-based platforms are allowing collaborating team members to stay up-to-date with each other’s work while it is being performed. With younger design talent looking for greater autonomy and schedule flexibility, workplace studies are showing that productivity is enhanced not diminished.
10. HR executives are taking better advantage of emerging recruiting technology.
Recruiters are learning to maxim current analytics and reporting dashboards to streamline current process and target strategies. Speaking to a group of undergraduates recently about job search and interviewing skills, we discussed the fact that, initially, LinkedIn and other online job applications were seen merely as ways to augment or legitimize a candidate’s paper credentials. Recruiting is heading toward fully digital process.
Bob Myhal, former CEO of NextHire was quoted as saying, “From the resume to the search to the interview, we’re moving toward a digital hiring mode. Resumes will be displaced by constantly evolving representations of individual experiences, skills and aptitudes that exist in the digital realm. More and more employers are leverage webcam and video interviewing to streamline the hiring process. We are already seeing a steep uptick in one-way videos where applicants record their interviews for later on-demand viewing.”
11. Candidates are seeking more flexible, customizable application options.
One of the most innovative emerging recruiting video platforms is Screenie, the brainchild of Utah entrepreneur Ken Frei. Available anytime, anywhere, Screenie allows job seekers to interview on the web or on their mobile device or tablet. Employers can review and rate interview candidates on the web or on their own mobile device or tablet. Compatible with any browser, Screenie offers a branded, customizable interview portal, customizable interview creation, data management and storage on candidates and the ability to share candidate interviews and profiles with firm representatives around the country or around the world. As recruiting budgets and timelines tighten, Screenie and programs like it are where the future is destined to go.
Another software company, SilkRoad, which bills itself as an “end-to-end talent management company” focuses on making the application process fast and easy through candidate job portals, employee onboarding and offboarding porters and specialty tools that foster sourcing via job boards and employee referral networks. Smaller firms can’t afford some of the more sophisticated technology that larger firms can but, if they have a website, they can make the process engaging and simple. According to a SilkRoad company spokesperson, “the ‘game is on’ for HR. The challenge? Keeping up with the radical pace of transformation, and understanding the trends. If technology innovation, the borderless office, and workplace re-engineering aren’t subjects of discussion in your HR department, 2016 could be an exasperating year for your company.”
12. Firm branding is taking on a life of its own.
Savvy candidates are evaluating firm brands before applying to or accepting a job. Company websites are the storefronts that job seekers look at to evaluate interest in a firm, with most spending less than two minutes on a site before decided whether to stay or go on. If the firm’s mission, vision and values isn’t front and center and if the application process isn’t straightforward and simple, good candidates will move on.
One of the most transforming technological tools younger candidates are using to make an employment decision is Glass Door which not only allows candidates to search millions of job listings but see real employee salaries, get interview tips and read reviews from current and former employees. I know of very few Generation Y or Z recruits who don’t first check out Glassdoor prior to applying or interviewing for a job. Think of it as an Angie’s List for professional service firms. Unfamiliar with the site until it was brought to his attention by a candidate, one large firm’s chief talent officer was stunned see information there on his firm that was not only incredibly accurate but depressingly negative — the unvarnished truth had lost much of its luster. He printed out all of the comments and convened a special management meeting to identify and implement improvements to make the firm a more attractive candidate destination.
13. The Chief Talent Officer gets a seat at the boardroom table.
For many firms that formerly considered HR an “overhead” function that dealt mainly with insurance and other benefits, ensuring EEOC and INS compliance, it is being elevated in stature, visibility and responsibility to be equal in importance to marketing. A CareerBuilder of firm executives revealed that 65 percent agree that HR opinions carry greater weight with senior management and 73 percent stated that they provided data that was an essential component of the firm’s business strategy.
What is sparking this shift? The ultimate realization that human resource executives have insight that no one else in the company does — insight into its individual employees and the overall workforce; providing valuable recommendations on skill shortages, succession planning, employee productivity and contentment and most importantly, why employees are leaving to go work for competitors.
Chief Talent Officers are also being tasked with maintaining relationships with stellar architects throughout their entire career. According to Paycor, employees are changing jobs at a faster rate than ever before, and short-term employment is now the norm. Young employees now believe that they will work for 15-20 companies during their careers, up from five-seven just 15 years ago. This demonstrates a shift in employment practices that every firm must recognize. With this shift, employers have to stop thinking that changing companies equals disloyalty. Top talent will move around in order to gain a competitive advantage in their careers. Viewing multiple employers as a negative will sharply limit your available talent pool and close your business off to many potentially impactful employees. One of Gensler’s most effective recruiting strategies is to aggressively pursue “boomerangs” — those individuals who leave to work at a competitor, only to find the grass wasn’t as green on the other side as it once seemed — with a standing offer to come back.
14. Data analytics are getting more sophisticated.
In 2015, studies found that 70 percent of recruiters claimed data analytics was important to the hiring process. While social networks and other digital profiles has opened a wider pool for recruiters to pull from, analyzing that takes human resource staff away from their end game — hiring. The next trend will be not just sourcing social recruiting data but using high-quality analytics programs to summarize important information. Boston-based NextHire is using digital technology, Big Data and algorithms to make hiring less time consuming and cheaper to small- and medium-sized firms. With NextHire, a company pays a flat fee of $4,000 per open position, and the startup uses webcam interviewing, online skill and behavioral assessments, big data analysis, algorithms and social networking to vet candidates sourced from all the usual places, such as traditional job boards, Craigslist, and LinkedIn and identify finalists for the companies to choose from. According to CEO Bob Myhal, the process can be done within a month, as opposed to several months, and NextHire’s digital technology uses the types of big data and algorithmic analysis that enterprise-level, Fortune 500 companies use to find candidates. New York-based Bountyjobs helps firms evaluate past and current recruiting firm successes and plan for their future needs through building a more effective and efficient pipeline and turn benchmarking data into repeatable results.
15. The administrative aspects of HR are getting more complicated.
In 2016, HR will be required to provide ACA Reporting (Affordable Care Act) for the first time and will encounter significant revisions to the Fair Labor Standards Act. With regards to the latter, last June, the Department of Labor proposed new rules that would entitle some 5 million additional workers to overtime pay under the Fair Labor Standards Act. Most significant would be to double the salary level threshold, below which salaried employees are eligible for overtime pay, from the present $23,660 per year to $50,440 in 2016.
In his State of the Union Address last year, President Obama called on Congress to approve legislation that would require employers to provide most employees seven days of paid sick leave a year. While a number of employer organizations expressed opposition, states and localities continue to enact their own paid leave laws, including California, New Jersey and Rhode Island as well as cities like San Francisco, Seattle and New York. And Washington D.C. is considering a 16-week paid family and medical leave bill. Should employers expect federal mandatory paid leave legislation to become law this year? No employers expect that when Election 2016 turns to domestic policy the Affordable Care Act, Fair Labor Standards Act rules and mandatory paid leave will be top concerns.
This past September, the U.S. Department of Homeland security updated its E-verify program to determine that all employees of U.S. firms are legally able and authorized to work in the United States. Opponents argue that the database is frequently out of date with regards to potential employee’s actual work authorization status and correcting errors or updating information is frequently time-prohibitive, resulting in the loss of outstanding design and technical professionals to practices in other countries. Firms are also complaining that the processing of H1-B and similar visas for foreign nationals with specialized areas of expertise has now burgeoned from approximately six weeks to more than 18 months, due to government staffing that has not kept pace with demand.
16. HR staff leading firm dialogue on staff retention and upward mobility.
According to an article which appeared last year in Forbes, for entry-level employees it costs between 30 and 50 percent of their annual salary to replace them. For mid-level employees, it costs upwards of 150 percent of their annual salary to replace them. For high-level or highly specialized employees, you’re looking at 400 percent of their annual salary. You’d think with those kind of metrics, firm leaders would spend more resources trying to keep the good people that they have — especially since research from multiple sources reveals that it’s not money that attracts most people to jump ship.
Internal HR and recruiting team members should spend roughly a third of time involved in developing and implementing programs and strategies that make people want to stay in the firm once they get there. After commissioning a confidential study, one of the nation’s largest A/E firms was horrified to discover that 21 percent of their staff left within two years of their start date. Further research indicated that there were a number of systemic failures beginning with the onboarding process, and including broken promises regarding compensation and benefit issues, lack of recognition and appreciation, a clear demarcation between the haves (management) and the have-nots (non-managers) — all of which were easily remedied. I’m aware of a mid-sized firm in the mid-west where the HR director views himself as the “chief retention officer”: “If someone comes here and they’re not happy enough to stay, I view it that I have personally failed them in some way. He is given wide latitude to customize work schedules and benefit packages for each individual and, as a result, the firm has never lost anyone to a local competitor.
The trouble with trend-focused articles is that they can never be completely comprehensive and the fact that an article as ten trends or sixteen doesn’t make any of them more or less important. What is important, however, is that a firm identifies those trends that will most affect its particular practice and then develop and implement an appropriate strategy that takes maximum advantage of them.
Whatever those most pressing trends will be for your practice, 2016 promises to be an exciting time for design firms. Market trends such as expansion of third-world capital cities, the revitalization of decaying domestic urban cores, transit-based live/work/play centers, sustainably designed communities and advances in innovative building materials continue to result in incredibly exciting commissions in every possible market sector. As has always been the case, whether a firm thrives or withers this year will depend on its assemblage of a talented, integrated team of professionals who feel empowered and committed to give their best to whatever task is at hand and its strategic response to the market forces which affect it.
Kerry Harding is president and chief recruiting officer of The Talent Bank, Inc., an executive search firm specializing in design professions based in the Washington, D.C. area.