Recently, two firms I know of laid off groups of employees. One victim was a veteran of over ten years. Another was a junior employee being mentored by one of the best people in the office. They were all valuable employees the firms had invested in and benefited from. If you can believe it, when I was laid off I actually felt sorry for the leaders who had to drop the guillotine. There I was with my neck under the blade and I was saying things like, “I know this must be difficult for you” and “So sorry you have to pull the lever.” Even after the blade came down I kept saying this, a talking head without a body. And here I am, still a talking head! Leadership is undoubtedly in a difficult situation. After chopping someone’s head off they probably go back to their desks, pull out their little metal flasks of whatever they prefer and take a swig. Think of the emotional damage this does. I wonder if this makes it difficult for management to carry on in their leadership roles to help their firms weather the storm. Can a captain who throws crew members overboard still function as a good captain? I suppose that is for the historians to determine. And what does the rest of the crew think?
When it is time for a mutiny? What would happen after a layoff if the ones who remained threatened to leaves en masse if the layoff wasn’t repealed? Of course, everyone is afraid of losing their jobs so people don’t dare challenge firm leadership. But what if they did push their bosses to come up with other strategies? When people are asked to leave everyone else remains silent. The culture of architecture has taught us that this is just something that “needed to happen.” One might assume the psychic cost of laying people off would be enough of a deterrent to implement other methods. Sadly, this is not the case. Layoffs are the quick and dirty way, a proxy for long-term strategies and sound business practices. Layoffs have also been institutionalized within the culture of architecture—accepted as the norm. Here is what the Architect’s Handbook of Professional Practice has to say: First, they recommend avoiding the term “layoff.” “Staff reduction” is the preferred term because people who have been “laid off” could mistakenly infer the firm will immediately re-hire them when the workload increases. You really need to read it yourselves to believe it. Most of the section on “staff reductions” actually seems to deal with CYA tactics to protect management. It doesn’t talk much about what employees should do. As the Once-ler said, “Business is business.” But if business is business, let’s practice good business rather than bad. According to the Wall Street Journal (“What are Alternatives to Layoffs?”), there are some basic strategies companies can enact well before they get to layoffs. Because of the long-term negative impact caused by letting talented people go, it would seem wise to do whatever necessary to hold onto people. Architects might be imaginative when it comes to design, but they are not very creative when it comes to business. It is important in the long run for the profession to evaluate how it treats its talent pool. By simply defaulting to the position of “staff reduction” it sends the message that people are ultimately mere commodities. How can a profession that claims to elevate humanity through design function ethically when it is based on the dehumanization of its workers? Sometime back in 2008, the word from one firm’s Leadership was, “We are cautiously optimistic.” They beamed this message over the net from office to office. This should have been the red flag for all of us. Because they were “optimistically” reading the tea leaves—at least this is how they were presenting it—they were not positioned at the early stages of the recession to adjust course. This is the “Titanic Syndrome” as played out in architecture. Remember, the Titanic was unsinkable. Because lifeboats would never have to be used it was decided to minimize them. Plus there was the issue of the rudder being too small. If the designers had prepared for the worst the ship would have missed the iceberg. Or, it could have at least had enough lifeboats to save all the passengers.
For one firm, in the middle of the recession it was business as usual. They were acquiring smaller firms, hiring new upper-echelon people at high salaries. Senior staff went on retreats, stayed in nice hotels when traveling. Principals had boats to pay for, private schools for their kids, nice modernist houses. They bought a $40,000 laser cutter. They were flying business class to India and other global destinations merely for the possibility of work. Budgets can accommodate this when times are good, but once things start to head downhill it might be time to reconsider every level of how a firm operates. We were “cautiously optimistic” when we should have been scared shitless. The silver lining to recessions (if there is one) is that they present opportunities to re-tool your business. If your company can respond and adapt it will probably be the better for it. Recessions can reveal systemic weaknesses that remain dormant until something triggers them to appear. This is when managing principals with limited business knowledge can benefit from working with outside consultants who have MBA’s and PhD’s. When I was part of a large corporate firm I was required to attend “State of the Practice” conferences. Every year, the office would shut down for an entire day to go to some posh hotel to make presentations and engage in round-table discussions, “break-out groups” they were called. Everybody hated them. We were basically presenting to ourselves and talking amongst ourselves about how the office is doing, where it is headed, and how great we are. What they should have done is bring in outside consultants to tell us what they thought. State of the Practice 2009 focused on, you guessed it, ways to deal with the recession. We were all assigned to groups and given the task of putting together creative presentations to be performed at the meeting. Yes, we were exhorted to “be creative” and “perform.” Of course the political climate in the office was so oppressive that people didn’t dare come up with anything substantive. Presentations were vapid and pointless, full of humor and designed to entertain more than anything. Moreover, the fact that we were asked to come up with solutions made everyone feel like Leadership didn’t have a clue. This had already been set in motion by the aforementioned “cautiously optimistic” speech that was supposed to give us confidence. Leaders can bolster confidence by engaging reality, not hope. This is the difference between offices that are surviving and those that are gutted like one I visited that had let go 80% of its workforce. I think we were bold enough to suggest not buying name-brand paper towels. Another tactic was selling stuff on Ebay. In retrospect, had I not been so nervous about sticking my neck out, I would have offered the following: One obvious alternative to layoffs is the ever-popular all-staff salary reduction—even for the principal with the yacht payments. After I had been laid off, one principal advised that I should always live in such manner that I could make it on half my salary. If he was willing to take his own advice he would be in a good position to accept a pay reduction. Plus, shouldn’t the decision-makers share the pain rather than simply passing is down? Work sharing can also help offset the reduction in salaries. For example, the University of California system implemented salary reductions from the highest levels down, including faculty. The original plan was to reduce salaries for administrative staff only, but their powerful union was so adamant that the pain be spread more democratically that the cuts were ultimately distributed through all ranks and functions.
Consolidate office space. Painful and uncomfortable as it might be it would be easier to deal with spatial rearrangement rather than the long-term costs of letting staff go. There was no real justification for holding onto all that real-estate when the projects to support it simply weren’t there. Get rid of that floor that was dedicated to one project. Shift people up to one single floor. People would have moaned and groaned and found reasons for why this could not be done. There were open stairwells. What do you do about those? Surely, architects could figure something out to make it work. A less conventional strategy is allowing more flexibility for telecommuting. Let people work from wherever and keep the office closed for certain periods or at least partially shut down. What would running an officeless office be like? It takes advanced, bold leadership to implement such practices. It also takes a more adventurous corporate culture. When leadership style is founded on distrust and the policing of employees such options can never enter the discussion. What if the AIA joined with other business lobbies in Washington to promote incentives for businesses that hold onto people in tough times? While incentivizing hiring is a good thing, it would be even better to incentivize keeping people. This could also include incentives for the re-hiring of laid-off employees.
Here is the big one: the multiplier must be lowered. Clients are using the economy to demand extremely low fees. They know architects have their backs against the wall. Many firms that are getting what projects are out there are often working at cost, or even losing money just to keep busy. One firm that recently did layoffs has adamantly refused to reduce its multiplier. It has consistently been beat out of projects by firms that were willing to charge lower fees. It is extremely ironic that firms are being pushed into economic positions junior architects have been living with for years. You want me to work for you for how much? Are you crazy? How can I afford to run my business? This speaks to a general devaluing of architectural services in our society that in the long run needs to be addressed. We expect to pay a premium for an ipad, but when it comes time to purchase good design everybody wants a discount—especially in a recession.
Since this is the reality for the time-being, firms have to adapt or suffer the consequences. Laying staff off will not change this broader market dynamic. Forward-thinking firms will adapt to the market, and hopefully began doing this back in 2007, or 2008 at the latest. It is better in the long-run for firms to reduce their multipliers, get a few projects, forego profit and keep their employees. The firms that simply rely on layoffs will suffer far longer internally and have a more difficult time recovering from the damage than the firms that keep their good teams together and weather the storm together. The ship that does not throw crewmembers into the waves is more likely to make it into port, battered but in one piece. The Indicator, a weekly column focusing on the culture, business and economics of architecture, is written by Guy Horton. The opinions expressed in the indicator are Guy Horton’s alone and do not represent those of ArchDaily and it’s affiliates. Based in Los Angeles, he is a frequent contributor to Architectural Record and other publications.