If you have ever run a business you know it: The Payroll Terror. Every two weeks, huge sums of money go to feed employees and their families and other chunks to feed various government entities. It’s a recurring Groundhog Day of anxiety and pressure, offering only temporary relief.
Architecture may be worse than others, because it offers both a product and a service. The profession is charged with protecting public safety while being tasked with manifesting cultural innovation. But architecture is also a business, and the vast majority of offices are small. What that often means is that many of us are responsible for writing checks to our employees every week or two. “Making payroll” is a unique burden, but it may be changing as technology completely transforms our offices.
The process of employee-centric design may be coming to an end, or at least in for radical transformation—and that may spell big changes in the psychological crush of making payroll. But for now the burden still remains. The intense terror I have every two weeks when I scrape up the money to pay people that I am deeply committed to, distorts both my day-to-day perspective and creative MoJo. The never-ending need to “get it drawn and billed” is a perfectly understandable response by small firm principals like me.
When I interviewed Deborah Berke, the new dean of Yale’s Architecture School, for the Hartford Courant, it was clear that my editor wanted me to delve into her still anomalous gender, in a field that has been historically male (and is still overwhelmingly white). But she quickly noted that all four Ivy League architecture school deans were women; Berke was most proud that she had a BArch degree from a non-Ivy school (Rhode Island School of Design) and a non-Ivy Masters (City College of New York) in urban planning.
We’re long time acquaintances, so I said to her that neither of those credentials were as important to me as the fact that she met a payroll, every two weeks, for sixty (60!) employees. Her eyes rolled. “It’s brutal,” she sighed.
Ask any small business person, and they will tell you that part of their mind is always thinking about the next payroll.
Ask any small business person, and they will tell you that part of their mind is always thinking about the next payroll. I have about seven employees, a few part-time, and have for thirty years. I have made over 1,000 payrolls and cut close to 7,000 checks. Never missed one. On the flip side, as a business owner, I have not paid myself about half of the time. There is nothing unusual about that, especially in the “creative” marketplace. In all service industries we mostly bill for work already accomplished, after all the employees have been paid.
But the terror and grind of meeting payroll has, I think, special meaning to architects. Most offices have under ten employees, so there are many bosses on the hook for payroll. Unlike doctors who either work in hospitals or are morphing into shared practices, we’re in the same boat as lawyers, who can work in an office, with or without staffs. In architecture the split between large and small offices is extreme— only 20% of architects work in small offices, but over three-quarters of all offices have fewer than ten people.
From the AIA we have these stats:
But “Payroll Terror” may be changing, because the profession is changing. Where once we could expect a 13-15% profitability over cost, that figure is down, perhaps for the foreseeable future, to 10%. This reduction in cash flow and margin, I believe, is the result of competition and the open price comparisons between firms.
You would think fewer paychecks might reduce payday stress for principals, but it’s not that simple. As this transition changes firms, the burden of meeting payroll remains (employees still have to be paid), and on one level may get worse because fees are, more than ever, set amid the ongoing mud-wrestling with our peers in transparent and instantaneous comparisons by potential clients. The internet offers instant answers to those auditioning architects, so cost is more important than ever.
BIM means fewer human heads and hands are needed, since it allows you to bypass the time-suck of architects reinventing the wheel as they draw buildings. As a result, the entire drawing delivery system relies on fewer employees. For over 30 years, the human hours necessary to provide deliverables has had a generational slide. First, old-time hand drawing mandated huge payrolls and small hard costs for most firms; the efficiencies of CAD still required a human clicking on the computer screen. Now a whole new generation of technology enhances productivity by creating those deliverables with far fewer people, and a lower payroll.
The design/build process is now becoming completely integrated by technology. That facilitates tighter comparative fee estimates in proposals, which often reduces profit and strangles cash flow, perhaps making payroll even more stressful, especially for smaller firms.
More architects may simply opt to practice solo by upping their reliance on technology…The new and expanding cottage industry of freelance BIM consultants—and every other consultant imaginable—will make even more sense, as specs and details can now be seamlessly outsourced to vendors.
This evolving landscape may end up fundamentally changing small firms. By definition artificial intelligence ends much of the need for human work. I think more architects may simply opt to practice solo by upping their reliance on technology. Many will use BIM in their practices (many of course already are) and no longer require in-house CAD jockeys. The new and expanding cottage industry of freelance BIM consultants—and every other consultant imaginable—will make even more sense, as specs and details can now be seamlessly outsourced to vendors.
All this means that there will be even more appeal to going completely solo, while cultivating consultant relationships. Given the constant trauma of wrangling dollars every pay period, there is certain degree of liberation to swimming in a sea of independent operators, each with their own laptop, bonding with other free radical professionals to mesh for a project here, and then reforming on another project over there, and maybe going solo in another scenario.
The world of office culture is changing everywhere, and architectural practice has its own version of that shift. We may be seeing more lone wolf designers, ending an era where where small firms were the “mini me’s” of the big offices—including the perennial freak-out over payroll. For good reason: Terror is hard to take, especially when it occurs every two weeks.
Featured image via BioQuick News.