The Architectural Firm: Share Performance Indicators

This is part three in a series of articles focusing on commonalities I identified during a two year period visiting more than 200 architectural firms (small and large). Spending between one and five days in these offices, I was privileged to observe their operations and culture. Based on my experiences, I identified three strikingly common and problematic characteristics shared by firms of different sizes.

My first article discussed how firms fail to design their own business operations with the sort of attention they lavish on their client’s projects. The second article suggested a primary reason why architects are notoriously under-compensated. This article is an open and honest assault on the practice that only certain, privileged individuals should be privy to the financial health of the firm.

I’m not sure where or when this ‘hold ‘em close’ practice began. The idea that financial information should be shielded from staff is not only out-dated but damaging. If you believe your team doesn’t need to be bothered by financial information in order to perform their jobs, then you haven’t really figured out the value of your employees.

We’ve heard the term “transparency” in politics for quite some time. Transparency is critical to make informed decisions regarding the direction of our government, who to vote into office, and how we want our tax dollars spent. In your firm, if you don’t know how much to share with your employees, the answer is quite simple: The More, The Better. Remove all mystery. They are adults. Sharing information with staff gives your business an edge over your competition. Who knows, you may discover the next major rainmaker for your firm.

Let’s illustrate ‘sharing’ with a simple situation common in our industry. A problem arises on a project, be it in design, with the budget, with a consultant or in construction. Our first inclination is to guard this information. By not sharing the bad news with the client, we tells ourselves we have time to figure out how to solve the problem and get the project back on track. As we all know, that’s rarely the result. Instead, months pass, the problem worsens, and there’s no way to dig out of the hole. Bringing your client into the discussion when the problem first arises allows them to become part of the solution. Everyone on the project has an interest in it succeeding.

Just as you share with clients, you should share with employees. Whether a project is a cash-cow or a drain on your cash reserves, every employee deserves to understand this. Otherwise, how will they ever learn what succeeds and what doesn’t? If you rely on a few senior leaders to keep your projects (and the firm) financially healthy, employees become complacent and disengaged from the firm’s success. Furthermore, high performers don’t function well in an atmosphere of secrecy. They want to be respected and valued for their ability to solve problems. These are precisely the people you want to hang on to. By being transparent, you remove the perception that there are groups within the company that work at cross-purposes. Transparency opens the door for professional growth that benefits the firm.

By creating a transparent company, everyone is mindful of the forces affecting the bottom line. If staff is not part of the solution, they have no option but to be part of the problem. I’m not suggesting that firm owners give their employees copies of their personal tax returns. I’m saying that your bottom line will be greatly improved if you share your project fees, costs and profitability with your team. Empower staff with information and use it as part of continuous improvement; for example, to understand why one project was more or less profitable than another. I’ve never seen a project become a financial disaster because the firm shared information. I have, on the other hand, seen many firms who treat their employees as incapable of handling the truth. They spiral into financial ruin, destroying careers or closing offices because they believed that only a few key players can be responsible for a firm’s success.