Staffing and leadership

Adaeze Nwosu returns in the sixth week, this time to talk about people. Her firm has twelve staff, and she says that every important decision she has made as a principal has been, in the end, a decision about people: whom to hire, whom to promote, whom to give the difficult client, how to keep a gifted designer who is thinking of leaving, and once, how to let someone go. Moss adds that salaries and benefits are about two thirds of a firm's net revenue, so staffing decisions are also the largest financial decisions a firm makes. The students' business plans all assume that their firms will grow, and this week they must decide how, when and with whom.

The shape of a firm

Moss returns to the pyramid from the first week. A healthy small firm needs people at several levels: principals who win and lead work, project architects who run projects day to day, architects and interns who develop the design and documents, technologists who produce technical drawings and models, and someone who runs the office. The mix determines what the firm can do. A firm with too many senior people is expensive and may not be able to compete on fees for routine work. A firm with too many junior people cannot supervise them properly, and quality and morale suffer.

Each role has a target for billable time, which falls as responsibility grows. A principal who spends half her time on projects and half on marketing, management and mentoring is doing her job well. An intern who is billable only half the time is probably not being given enough work, or is being asked to do too much administration. Nwosu tracks each person's billable time monthly, not to judge individuals but to see where the firm's workload is unbalanced.

When to hire

The most common staffing mistake in small firms, Moss says, is hiring at the wrong time: too late, so that the existing staff work overtime for months and the best of them leave, or too early, so that a new person sits idle while the firm waits for a project that is delayed. The answer is to compare the signed work with the firm's capacity, quarter by quarter, and to plan hires against the gap. Nwosu's firm does this every month at a staffing meeting.

# When to hire: signed work against capacity, quarter by quarter, for a nine-person firm (Canadian dollars).
HOURS_Q = 470                                            # paid hours per person per quarter
staff = {"principal": (2, 0.45), "project architect": (2, 0.75), "architect": (2, 0.80),
         "intern": (2, 0.85), "technologist": (1, 0.85)}
cap_q = sum(n * u * HOURS_Q for n, u in staff.values())
signed = {  # project: billable hours in quarters 1-4
    "seniors co-op":      (900, 1_000, 700, 300),
    "infill housing":     (600, 600, 450, 250),
    "library renovation": (0, 400, 1_600, 1_500),
    "clinic fit-up":      (700, 450, 200, 0),
    "small projects":     (650, 600, 600, 550),
}
rate = 135
print(f"billable capacity per quarter: {cap_q:,.0f} hours")
for q in range(4):
    need = sum(h[q] for h in signed.values())
    load = need / cap_q
    note = "hire or subcontract" if load > 1.05 else ("win more work" if load < 0.85 else "balanced")
    print(f"Q{q + 1}: signed {need:>5,} h  load {load:>4.0%}  {note}")
hire = 0.80 * HOURS_Q
cost = 82_000 * 1.2 / 4
print(f"one new architect adds {hire:,.0f} h a quarter, costs {cost:,.0f} and can bill {hire * rate:,.0f}")

billable capacity per quarter: 3,078 hours
Q1: signed 2,850 h  load  93%  balanced
Q2: signed 3,050 h  load  99%  balanced
Q3: signed 3,550 h  load 115%  hire or subcontract
Q4: signed 2,600 h  load  84%  win more work
one new architect adds 376 h a quarter, costs 24,600 and can bill 50,760

The model, which Nwosu built from a year in her own firm's history with the project names changed, shows a position many small firms recognize. In the first two quarters, signed work fills about 93 to 99% of the billable capacity, which is about right: there is enough slack for proposals, training and holidays. In the third quarter, when the library renovation reaches its documentation phase, signed work exceeds capacity by 15%. In the fourth quarter, as the seniors co-op and the clinic finish, it falls to 84%.

A permanent hire would solve the third quarter, Moss says, and leave the fourth quarter worse. A new architect would add about 376 billable hours a quarter, cost about 24,600 dollars a quarter in salary and benefits and could bill about 50,800 dollars. That is a good return when there is work for her, but a heavy cost when there is not. The better responses to a temporary peak are to move the library's schedule a few weeks if the client agrees, to bring in a contract architect for a few months, or to subcontract part of the documentation to another firm, while the principals spend the third quarter winning the work that will fill the fourth. A permanent hire makes sense when the backlog shows sustained demand, usually two quarters or more above about 95% of capacity with more work in the pipeline.

Hiring well

Nwosu describes her hiring process. She writes a description of the role that states the work, the responsibilities and the experience required, rather than a list of software. She advertises through the schools, the professional associations, her own network and job boards. She reads applications against the description, interviews the strongest candidates twice, once with herself and once with the people they would work with, and asks each to walk through a project they worked on: what they did, what went wrong and what they learned. She checks references by phone. And she makes offers quickly, because good candidates have other options.

She is careful about the law. The Manitoba Human Rights Code prohibits discrimination in employment on grounds including race, sex, age, disability, religion, family status and sexual orientation, and the Employment Standards Code sets minimum requirements for wages, hours, overtime, vacation and termination notice. Many architects and senior staff are paid salaries and work beyond standard hours; Nwosu tells the students that the rules on which employees are entitled to overtime pay depend on the role and the jurisdiction, and that a firm should get advice rather than assume that everyone on a salary is exempt.

Paying people fairly

A firm needs a clear structure for pay. Nwosu's firm has pay bands for each role, based on salary surveys from the professional associations and on what other firms in the region pay. Each person's salary falls within the band for their role, and moves within it according to experience and performance. Once a year the principals review every salary against the bands and against each other, looking for unexplained differences between people doing similar work. Moss reminds the students that in Professional Practice the class found gaps of about two thousand dollars between people in the same role, and that such gaps, once found, should be closed.

Pay is not only salary. Benefits such as health and dental coverage, retirement contributions, paid time off and professional development are a large part of total compensation. Nwosu's firm pays for licensure examinations and for continuing education, gives each person a training budget and allows time off to study. She says that support for licensure costs her firm a few thousand dollars per person but is the benefit staff value most, because it builds their careers.

Leading a team

Moss distinguishes management from leadership. Management is making sure the work gets done: schedules, budgets, assignments and quality. Leadership is giving people a reason to do it well: a shared purpose, trust, room to grow and the confidence that they will be treated fairly. Small firms need both, often from the same two or three people. Nwosu says that the principals of a small firm set its culture whether they mean to or not, by what they praise, what they tolerate and how they behave when things go wrong.

She describes four habits that she tries to keep. The first is clarity: every person should know what is expected of them this week and this year. The second is feedback: frequent, specific and private when critical, public when positive. The third is delegation: giving people real responsibility, with support, so that they grow and the principals' time is freed. The fourth is fairness: in assignments, pay, credit and opportunity. She admits that delegation is the hardest for founders, because they started the firm to do the work themselves. A principal who reviews every line on every drawing caps the firm's growth at what one person can review.

Culture, hours and well-being

Architecture has a long tradition of late nights before deadlines, and some firms treat it as a badge of commitment. Moss and Nwosu reject it. Chronic overtime is a sign of poor planning or underpricing, it drives good people out of the profession, and tired people make the mistakes that lead to claims. Nwosu's firm plans projects to normal working hours, tracks overtime and pays for it, and treats a pattern of overtime on a project as a signal to the project manager and the principals that something must change.

Hybrid work has changed how small firms operate. Many now let staff work from home part of the week, with set days in the office for collaboration and mentoring. Nwosu says that it has helped her keep staff with young children and long commutes, but that junior staff learn far more when they sit near experienced colleagues, so her firm asks interns and new graduates to be in the office more often. She also notes that cloud-based design tools have made hybrid work possible, but that they bring security responsibilities the students will meet in a later week.

Mentoring and growth

People stay where they can grow. Nwosu's firm assigns each intern a mentor who is not their supervisor, reviews each person's experience record for licensure twice a year, and makes sure each intern gets experience in every area the licensure program requires, including construction administration, which small firms sometimes neglect. Each year every employee writes a short development plan with the principals: the skills they want to build, the projects that would help, and the steps toward their next role. Moss tells the students that the cost of losing a project architect, counting recruiting, lost productivity and the knowledge that walks out of the door, can approach a year of that person's salary, and that mentoring is the cheapest retention program a firm can run.

When things go wrong

Nwosu talks briefly about the hardest part of the job. Sometimes an employee's performance does not improve despite clear feedback and support, or the firm loses a major project and cannot afford its payroll. In both cases she tells the students to act early, honestly and within the law: document the problems and the support offered, give clear notice of what must change, follow the employment standards on notice and severance, and treat the person with dignity. Firms that avoid these conversations harm everyone, including the employee, who deserves to know where they stand.

Exercise 6: a staffing plan

• Draw your firm's organization chart for year one and year three.
• Compare your signed and expected work with capacity by quarter, and decide when to hire.
• Write a role description for your first hire.
• Describe the culture you want in five sentences, and one practice that would make each sentence true.

Self-check

• Do I plan hires against capacity rather than gut feeling?
• Do I know the employment rules that apply to my firm?
• Is pay in my firm consistent, fair and reviewed annually?
• Do I delegate, give feedback and support growth?