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Work smarter, not harder and learn to say no

Gaining the competitive edge means realising the value of non-chargeable time and winning the talent war. Ruth Slavid reports from the 'Making Practice Pay' seminar

Senior architects should put twice as much effort into management as their equivalents in other professions - precisely because they are so bad at it. This was one of the startling points made in the 'Making Practice Pay' seminar, responding to the findings of the first AJ/Colander benchmarking study of architects' practices.

So how do you make your practice successful? According to the experts speaking at the event, you should make sure your partners do not do too much chargeable work;

get accreditation with Investors in People;

use your clients to do your marketing for you; become a good partner in your projects; and follow a few simple guidelines to avoid the need to make claims.

Chris Andrews of architectural management consultancy Colander, outlining some of the findings of the benchmarking study (see box on page 22), said: 'We believe strongly that the profession doesn't do itself any favours'. The purpose of the event was to help architects change that situation.

Since earning enough money is crucial to successful performance, the first specialist speaker was an accountant. Steve Gale of Horwath Clark Whitehill took a dispassionate look at the workaholic profession of architecture. 'You should be working more smartly rather than working harder, ' he said.

'For a partnership every pound added to the bottom line is a pound in the pocket for the partners.'

Accountants measure income in terms of work in progress - the number of hours of work being done, multiplied by their hourly rate.Of course, this value varies according to the person doing it - the more senior, the higher the rate. Questions practices should ask themselves, said Gale, include: 'Does the fee you ultimately end up with recover the value of all the work in progress - ever?

Occasionally? Always?'

As a rule of thumb, he said, charge-out rates should consist of 40 per cent salary costs, 30 per cent overheads and 30 per cent normal profit. The secret of making your income cover your rates, he said, is 'make sure the work is done at the appropriate levels. It might take people with less experience more time to do the job, and they would need more supervision, but their charge-out rates are lower.'

There was the predictable outcry from some of the audience about the superior design skills of senior architects, which cannot be replicated in any lengthy iteration by a junior member of staff. But this does not invalidate the argument: of course the most experienced people should make their input where it is vital, whether with a conceptual leap or by advising a more junior member of the team. But they should not be doing work that others could be doing more effectively.

'Who records the most chargeable time?'Gale asked. Partners and directors should do no more than 1,200-1,400 hours of chargeable time a year. If they do more, it raises the question of who is actually managing the practice.

'People like doing what they have always wanted to do, ' Gale said, 'but as we get more senior it shouldn't always be possible to continue doing it to the level we have done in the past.' In other words, senior architects must make time to manage their practices.

'Non-chargeable time is not a dirty word, ' he said. 'It is important time for those who manage. The bigger the practice, the more time that requires.' With architects' notorious disinclination for management, this may be one reason why the ratio of profit to turnover falls as practice size increases.

Peter Redman of the Notting Hill Housing Group believes that architects have to try extra hard. 'I see in architecture a training and a culture of creative and individual approach, ' he said. 'The concept of management is not part of the culture. Then you have to double up the amount of management to achieve the effectiveness a team needs.'

Gale made another near-heretical suggestion - turning work away. 'You can just say no, ' he said. 'There really might be some work you should turn down, because it is not possible to do it. With a fixed capacity, you must turn down the unprofitable work to do the more profitable work.'

He acknowledged that 'sometimes you really want to do it because it sounds so interesting. But sometimes you have to turn it down.' This struck a chord with Colander's research, which found large practices undertaking some ridiculously small, and surely unprofitable, jobs. 'Many large practices are actively involved with projects of less than £500,000, ' said Colander's Caroline Cole.

'And even practices with more than 20 people are involved in jobs of less than £100,000.'

This talk prompted some confessions. RIBA president-elect Paul Hyett said: 'I do the things I like doing, not the things I should be doing.' As for turning away non-profitable work, he said: 'I would really like to do it. We shouldn't be running a practice that is using one sector of the work to fund another.'

Setting up effective ways of running a practice will be valueless if that practice cannot attract and retain good enough staff. This was the subject of a paper written by Sheila Hoile, director of education and professional development with the Construction Industry Council, presented for her by Chris Andrews.

'You need to develop people who know your business to whom you can delegate work and whom you can trust, ' wrote Hoile.

She identified the key issues as:

low profitability;

high salary increases;

growth;

high staff turnover; and managers not spending enough time managing their practices.

In addition to time and money spent on recruitment, high staff turnover resulted in a loss of morale, the breakdown of communications at project level, and a risk to client relationships, she argued. Increasingly tender documents are looking for evidence of good staff conditions and stable working relationships. 'You lose competitive edge if you can't supply the evidence, ' she wrote.

Hoile believes that practices must 'win the talent war' by attracting and retaining the best staff. This, she said, is what 'competitive edge' is all about. It is not about access to money - 'That is easier than ever before.'

It is not about access to technology - 'Everybody can draw on everything.' It is about how you use the technology and the information available. 'How we are developing and using people is critical, ' wrote Hoile.

With an increasing shortage of skilled people, having the best practice to attract the best is crucial. 'Graduates are more clued up, 'Hoile argued. 'They want better remuneration and training packages. They will only work for you long-term if they respect you.'

All this means that 'the leadership have to change the way they lead. Emotional intelligence is as key as qualifications.'

And it is important not just to keep talented people but to have the right mix of talented people. 'Clients and potential clients are more 'multi-ethnic', ' Hoile wrote. 'They are introducing different ways of working, more women, more home workers. They should align with consultants who show the same mix.'

Hoile's key question was: 'How can we do something about the dreadful staff turnover rates?' Her answer: 'Human resources need to develop skills and competencies.We have to be open to feedback - my exper ience o f a l l professional consultancies is that they are very bad at being open to feedback.We have to move human resources from being about payroll and holiday to being a central plank of strategy.'

One important way to do this is to go for Investors In People accreditation. Hoile runs TOPIC (the Training Organisation for Professionals in Construction) and that organisation is launching an initiative to take a small number of practices through Investors in People.

Once you know how to run your business effectively and how to hold on to staff, how do you set about getting work? It is time for the dreaded word 'marketing'. Simon Jones of branding specialist Interbrand Newell & Sorrell provided some useful insights. 'The power of a company lies to a great extent in its image, ' he said. 'A strong brand is a tangible benefit. For many it lies in the benefit it brings to recruitment.' In order to understand how your clients perceive you and the service you are giving them, feedback is essential, Jones believes. 'We do a lot of research, ' he said. 'We send out feedback forms on completed projects, on projects we have not won and immediately on winning.'

The company also gets feedback on its current work. It sends somebody who is not involved with that specific project into the client to carry out, ideally, a face-to-face interview, or to ask them to fill in a questionnaire.

'This stops things going wrong when they are starting to get a bit wobbly. Seven times out of 10 the business grows as a result. It is just totally surprising what you get from people.'

Jones calculates that the reasons for winning jobs are:

chemistry - 45 per cent;

'we care' - 30 per cent;

past work - 20 per cent; and price/value - 5 per cent.

This spread puts a premium on informal relationships. Interbrand tackles this by, for example, hosting evenings for potential and existing clients with interesting speakers.

What else works in marketing? Jones reckons that direct mail only works in certain circumstances. Advertising also has to be very carefully targeted. Getting out on the lecture/conference circuit and being seen as a spokesperson for an industry is valuable.

The company also undertakes direct initiatives. For instance, it will tackle a specific issue that affects one industry, such as the airlines, and then approach one company in the field to see if it wants to take them on.

In the end, though, 'our own clients are the best marketing tools that we have.We try to involve them in our business - they find it very interesting.' Jones has some simple rules for tackling marketing:

know yourself;

know your market;

differentiate your offer;

keep at it; and keep your promise.

Working closely with clients can lead directly or indirectly to 'partnership', a much-abused word but still an important concept. Peter Redman of Notting Hill Housing Group outlined what he sees as a good partner.

A good partner will, he said:

deliver designs which add value;

provide a senior person who will get to know us ('in some practices most senior people are more into marketing than relationship management');

have good internal communications;

be robust about the design vision ('the architect holding to the design vision is key to us - that is what we are paying them for');

understand the business case ('but don't overdo it. The business case is about adding value in the long term').

It is essential, said Redman, that both sides of a partnership are 'learning organisations'.

He added something to overjoy practising architects: 'The importance of design quality in our sector must be recognised.'

Don Ward, chief executive of the Construction Industry Board, showed a degree ofcynicism about what often passes for partnering. 'It's a risk-management strategy for high-risk projects, ' he said. 'So consultants and others should be aligned to make sure it doesn't go wrong. The entire supply chain must be on board from day one.'

Descending from the heady heights of ideal ways of working to the practicalities of making sure things don't go wrong, Paul Hyett had some advice. 'Bill on time, ' he said. 'Don't work when people don't pay you. Don't issue a practical-completion certificate until 95 per cent of the money is in. That way, 78 per cent of all claims would fall away.'

Robin Nicholson, former chair of the Construction Industry Council and a leading figure in Movement for Innovation, summarised why he felt that all the issues involved were important. 'How do we move away from being the low-paid new working class of the construction industry to being the highestpaid new knowledge brokers?' he asked.

Architects who want to put themselves in a position to do that need to pay close attention to the issues raised in the seminar.

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