Reflecting on Now Practice Now: CASH
Now Practice Now is a yearlong series on the state of architectural practice.
Let’s talk about cash—how architects get it and what they do with it? The discussion is the first in a tripartite series entitled Now Practice Now, which acknowledges that fundamental change in the architectural profession is happening now. At the core of this conversation, 2018 BSA President Jay Wickersham FAIA challenges architects to appreciate that “practice is as much a design exercise as the designing of a building,” offering a chance for “deep innovation and creativity” in response to demands of globalization, BIM (Building Information Modeling), integrated project delivery, design/build, diffusion of scope, talent acquisition, loss and retention, and perpetual disparities of diversity and inclusion in the architectural profession. The candid dialogue has an audience of over one hundred people and a moderated panel of five practitioners representing myriad architectural business models: a 501(c)(3) nonprofit (MASS Design Group); a global company with an Employee Stock Ownership Plan (Gensler); and several small “architecture plus” firms that combine architecture with real estate development (DREAM Collaborative), graphic/editorial/urban design (over,under), and software design (Supernormal).
Jeffry Burchard AIA, Machado Silvetti principal and BSA Board design school representative for the Harvard Graduate School of Design (GSD), begins by providing a historical glimpse of how architecture evolved in the United States. Starting in the late 18th century, architects were “gentleman” merchants, planters, lawyers, and physicians designing buildings for their own pleasure, relying heavily on knowledge from master builders. Rarely accepting payment, “gentleman” architects preferred heightened civic visibility over profit. Thomas Jefferson—the third US president and “architect of democracy”—falls within this bunch. Burchard recalls an early 1800s excerpt from a letter written by one of America’s first professionally trained architects, Benjamin Latrobe, illustrating how “the profession of Architecture [falls] in the hands of two sets of Men… [gentlemen] who know nothing of its practice [and]… [mechanics] who know nothing but the practice” and little of the theory. From the Industrial Revolution to the GI Bill and the elitist Beaux-Arts academy, the profession continued to change. Today, the field of architecture is working hard to increase equity and diversity; and yet, the cost of access to the profession remains staggeringly high.
Following Jeffry's framing of the issue, session chairs Gabriela Baierle AIA, team captain at Arrowstreet, and Jenny French, principal and French 2D and design critic in architecture at the GSD, address the panel—and then the crowd as a whole—for insight and opinions on a number of cash-related topics.
Debt. While “average student debt in the US is $29K, for architecture students, it’s $40K.” Burchard references recent AIA student aid policy analysis that shows how “undergraduates in architecture are much more likely to graduate with six-figure debt than students with degrees in computer science, math, and healthcare.” Student debt often puts emerging architects at odds with newer, smaller firms who are initially unable to offer salaries to meet prospective employees’ financial needs. Several attendees share their difficult decisions to leave firms whose design work they loved in order to pay off their debt and support their families. In many cases this lack of work/life balance involves the need to leave the profession altogether; hence, another attendee asks, “How do we keep people in the profession? It didn’t work for me — I work for a real estate company now.” Complicating our relationship with debt even further, several principals described their need to take on even more debt — through personal loans, leveraging their homes for a line of credit, or not paying themselves — in order to pay their employees anything.
Value. Is it worth it? Where do clients see value in our work? Jeanne Nutt, managing director and principal at Gensler, describes how the firm offers clients access to a growing range of market expertise. Her clients value the collaborative and creative process that happens when Gensler teams address challenges by finding new opportunities. Elizabeth Christoferetti added that Supernormal is exploring value through intellectual property and licensing of software design; in turn, valuing architecture and design as a “more continuous spectrum between digital and physical.” Co-founder and design director of MASS Design Group David Saladik adds that clients find value in their mission-driven approach which shifts the value proposition of architecture “from a brand to one of social impact” for people, places, and communities. For example, MASS Design Group partners with their clients to help facilitate joint fundraising.
Transparency. When and with whom are firms’ cash dealings shared? Gensler’s Employee Stock Ownership Program is a model for financial stewardship where “employees share in financial successes at the same time as project successes.” DREAM Collaborative communicates financial goals to employees every year, making the implications for bonuses explicit. MASS Design Group uses 10,000ft—a resource management and time tracking software—to openly process connections between firm costs and fees.
Profit: a dirty word or a decision? How do firms defend profit? Is a fundamental part of the bottom line to generate income? Gregory Minott AIA, principal at DREAM Collaborative, says yes. “The reason why we have a business is to make money… to bring more cash in than we’re spending.” As an architecture and real estate development firm, their long term mission is to better the lives of their employees and the communities they serve. Minott emphasizes how this central goal is enabled through profit. An attendee later asks, “Who in the room agrees that your motivation for starting a firm is to make money?” A fraction of the room raises their hands.
Herein lies the critical issue of Now Practice Now: CASH—many architects’ deep discomfort with acknowledging the innate connection between value and profit. Despite descriptions of value, several panelists admit to the reality of how “every month is a cash flow problem” leaving them “scratching at the ceiling of possibility.” Chris Grimley, principal of over,under, notes the “financial hole of needing a project to get a project” commonly facing innovative firms, and how “other stuff” like pre-design, graphic design, and urban design often subsidize traditional practice complicating how income is categorized. Another attendee asks, “Why aren’t we teaching people that there is no shame in cultivating a profit cushion? Is one professional practice class enough?”
Infused with an entrepreneurial spirit in search of the next problem to solve, are we asking the right questions about cash? What do you think the BSA can do to help? Share your thoughts here.