The Indicator: There Must be a Better Way

Execution in France, 1929 via New York Times
Execution in France, 1929 via New York Times

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 What would happen after a layoff if the ones who remained threatened to leaves en masse if the layoff wasn’t repealed?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.

Titanic propellers, Harland & Wolff Shipyard, Belfast via Gummi Mar
Titanic propellers, Harland & Wolff Shipyard, Belfast via Gummi Mar

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.

Being John Malkovich. Directed by Spike Jonze. 1999 via HubPages
Being John Malkovich. Directed by Spike Jonze. 1999 via HubPages

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.

Throne of Blood. Directed by Akira Kurasawa, 1957 via British Film Institute
Throne of Blood. Directed by Akira Kurasawa, 1957 via British Film Institute

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.

The Wreck. Photograph by Francis James Mortimer. 1911 via Science and Society Picture Library
The Wreck. Photograph by Francis James Mortimer. 1911 via Science and Society Picture Library

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.


, a weekly column focusing on the culture, business and economics of architecture, is written by Guy Horton. The opinions expressed in 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.

Cite: Horton, Guy. "The Indicator: There Must be a Better Way" 23 Sep 2010. ArchDaily. Accessed 17 Sep 2014. <http://www.archdaily.com/?p=79193>

16 comments

  1. Thumb up Thumb down 0

    It’s hard for me, as much as I understand the frustration and pain of the author caused by his situation, to really fall in full support of this essay. There’s such a strong undercurrent of us v. them that I think the necessities that the “Them” face isn’t being considered with the same thoughtfulness as the effect on the “Us”.

    It’s hard to explain, unless you’ve been in the position, to look out over a balance sheet and realize that a company will, in all likelihood, be insolvent in a matter of time. The first thought is, always, to look for obvious and painless ways to a)increase income, or b) decrease expenditures. To extend the author’s ship metaphor, if you can reduce the water through the breach it’s not necessary to bail as hard.

    Unfortunately in conditions where new projects do not exist, or if they do they are so unfavorably compensated to actually hasten the company’s insolvency, you have to reduce costs. Sadly for architecture firms, the largest expense, without peer, is the cost of employees. In relation to staff outlay, the actual office doesn’t really cost that much.

    It seems cruel and heartless on the level of the individual, but at the organizational level losing staff is often the best fastest way to ensure that the company stops hemorrhaging money and can remain solvent and retain ANY employees at all.

    It’s smart to ditch any unnecessary capital or real estate expenses. But with 5 year corporate leases, that’s not always such a quick process. In addition, locking a business into a multi-year, money losing project isn’t really way to ensure survival, and is a good way to stunt the company’s ability to grow (and add employees) post recession.

    Tooling the company to be leaner going into a prolonged recession is smart business, for sure, but frankly a lot of that tooling, in a recession, involves some reductions in staff expenses. Also, a bubble like the one we have just endured was exceptionally cruel in that it was real-estate derived, and therefore involved architecture firms being busy and flush right up to the collapse. And architecture is so often an all or none enterprise. Although we all felt it coming, I defy you to find a firm that refused a project in 2006 (and any needed employees) because it felt like something was brewing. For architecture and construction firms, it’s not just a few fewer widgets sold in a recession, it’s possibly one or two projects of just a handful disappearing overnight.

    Releasing staff is by no means painless, and only foolish companies do it without weighing all options and projecting the future health of the company. But a leaner office that retains the best talent has a good chance of being ready to hire anew come better times (even if that means becoming 20% of the company you were…if you only have 20% of the income, what are you supposed to do).

    I agree with you in terms of lean times requiring sacrifices from all levels (temporary across the board pay reductions are a good option), and any executive who choses extra leg-room, or a Hampton’s rental over an employee is a fool. However, it’s one thing a business must consider at that horrifying moment when it becomes apparent that it only has cash and billings to survive a few months.

    • Thumb up Thumb down 0

      Let me append one thing onto my note above… This is all predicated on a robust, ample, and secure system of unemployment insurance. One that supports anyone faced with unemployment until they can find work (forget the bulls#*t arguments that unemployment insurance is a disincentive to find work).

      Remember that this is not painless to the company either, as they’re required to pay unemployment insurance, and to pay a portion of the assistance given to those they fire.

      A super-prolonged downturn like this takes its toll on the unemployed in ways that insurance can’t anticipate, and that also has to be acknowledged.

  2. Thumb up Thumb down 0

    are you seriously suggesting working at a loss?

    With advice like that it is no wonder the profession is dying

  3. Thumb up Thumb down 0

    that reminds of david brent telling neil and jennifer there’s going to be a mutiny in the office if they fire him. well, that actually didn’t happen, did it.

  4. Thumb up Thumb down 0

    Well I see some logic in working without profit for some period (hoping the period will end before ‘unhappy-end’). It’s better than not to work at all, isn’t it? Any company should have some “financial buffer” for a scenario like this, in that case there will be an oportunity to lower the profit and just lay low until the recession is over.
    Cheers

    • Thumb up Thumb down 0

      Nonsense. Consolidating floors and doing telecommuting? Having a (huge) buffer to go through difficult times?
      This are all nice words but the reality is different.
      Any company must be always ready to grow as well as to shrink – it’s just natural and healthy – and many attempts to skew this balance end up affecting the quality of the working environment or the job market.

  5. Thumb up Thumb down 0

    The author uses the ‘ship’ analogy, but the ‘hot air balloon’ analogy seems more appropriate. Just like the pre-recession real estate market was inflated and flying high, many firms got inflated too in a sickly response to a sickly demand. Now, when the balloon is going down fast and throwing out stuff doesn’t help, throwing staff is inevitable. Otherwise the crash will kill everybody. This is the reality of the hot air balloon business.

  6. Thumb up Thumb down 0

    Many good points of “sharing the responsibility” among all in an organization. Good leaders understand that. But I feel the ONE absoultely true statement in the article is… yes, it’s a difficult position we Owners are put in….. balancing practicing good design, quality services, and running a successful business with the responsibility of feeding many mouths.

    I realize I’m genaralizing and sterotyping, but in talking with peers across the country, there seems to be a consistent “trend”. I’m always surprised how little the younger generation understands about both (good design and successful business). I’m also baffled at this generation’s lack of committment to the “team”, and doing what’s necessary to succeed. Not just in architecture. It seems to be a geneartional thing.

    What many people don’t understand is the 80-20 rule… that 20% of the people in an organization do 80% of the work…….that “staff reductions” allow companies to filter out those less productive and less vital to the ongoing success of the organization. Those people don’t always become “identified” until they have been hired and worked in the organization for a while. Even the best intervieing / vetting / reference checking techniques can’t avoid hiring some folks who just don’t have what they claim, or don’t advance / learn as they should.

    These economic downtimes should be a wake-up call for EVERYONE to put their best efforts forward….go the extra mile…..pull together for weathering the storm…..stop moaning and feeling like you’re being taken advantage of by “the man”. It may not avoid still being caught in the “staff reduction” possibility. You could be good, and still find yourself laid-off. But if you’re a vital, key member of a firm, and in that 20% who carries most of the load………..it’s much less likely that it’ll be YOU that is cut.

    Yes, I can be considered a “Senior” (perhaps even an “old fart”). Yes, I’m an Owner of a firm. Bt each of our firm’s Owners (myself included) are working HARDER than than ever, and harder than every one of the people who work for us. And yes, I’m just a little bitter and frustrated with what appears to be an upcoming generation of architects who don’t seem to have the drive and ambition to ascend to leadership roles and successfully run the business we’ve created.

    Mutiny? Go ahead. Many days I say “get rid of 80% and start over”. Snap out of it, Gen X, Y and whatever the next one might be called. Step up. I appeal to you, as I’m afraid that our profession will wither and weaken further.

    • Thumb up Thumb down 0

      I understand the value of working hard, but I’m not about to do it if I don’t get anything in return. Why work hard to make someone like you rich??? Give me my fair share and I’ll do anything you wish. Otherwise, I’ll open up my own firm and compete with you!

    • Thumb up Thumb down 0

      Eli, you hit the nail on the head with most of your comment. Designers, not only the younger generation, need to step up and start relying on themselves. Stop basking in the pain of unemployment and start being proactive. At this point it is likely better for you that the 80% don’t have that unyielding drive to succeed. How scary would it be if, instead of crying mutiny, the skilled and newly unemployed came together and actually competed. Luckily most of those threats are empty.

      I agree, in part, with the author. I felt almost worse for my employer while I was getting laid off as I did for myself. I still feel bad for them even when it’s hard to find money to eat let alone try and find work. I think it is harder on the younger architects and designers as they don’t have the business sense or experience to jump out on their own. The hardest part of running a firm has to be setting loose a large number of employees with great experience and personal connections with your clients. It’s fairly easy to undercut your old firm when you know what they are charging. If a client knows that you have been the person they have been talking to and the person that is actually producing the work then a lot will be willing to give you a shot.

      Wish me luck as a new business owner!

  7. Thumb up Thumb down 0

    While I agree with Tuf Pak critique but I wonder why there has been little to no discussion about how to increase revenue as a solution. Upper management could tap into the computer savvyness of its younger employees to diversify before reducing. Our company branched out to graphic design, web creation, and product launching to shore up business. Who says architects have to stay in Architecture.

  8. Thumb up Thumb down 0

    What a great discussion this is inciting :)

    Everyone’s got some great points. I think they’re taking the author’s words too literally/out of context though. He doesn’t necessarily say you should never fire someone, just that a lot of steps should be taken before you resort to that. He’s trying to get people to think about alternatives to mass lay-offs, and I think that’s a great thing to try. Obviously, in the end, it might end up being necessary, but if you can streamline your office as much as possible before cutting bulk, then you’ll be better off in the long run.

    Just my two cents. Or nowadays $2 I suppose.

  9. Thumb up Thumb down 0

    Interesting, but you know what. Actually architects who has firms are really good business mans. they know how to lay off their staff and then in case of need get interns and pay them nothing. this is the best way to make money. specially some of the famous firms participate in invited competition for hundred thousonds of dollars, since there are no real projects, and give their interns or whoever works on it something like nothing. its a good bussiness, isnt it?

  10. Thumb up Thumb down 0

    For Eli’s illustration it might help to think of those 80% as the extra hot air in the ballon, most of them would never have been hired if there wasn’t so much demand.

    For Alex’s comment, some times the younger generation stays. I know a small firm whom all the employees are at 50% except the principal and the youngest member. The reason, the youth is the best Revit drafter and the only LEED accredited member, and he is payed well for it.

    For everyone who is still in shock, go out an study some business management, economics and accounting, you will learn that the American architecture community brought this on themselves.

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