Cramer Addresses State of Architecture Profession
May 04, 2011
Categories: UNM Talk
James Cramer, CEO of the Greenway Group, visited the UNM School of Architecture and Planning to talk to faculty and architects about the state of the architectural profession. He came last year, and this year's outlook appears improved for the design professions.
The Greenway Group, a strategy consulting and business networking firm for the design and construction industry, conducted a survey of 700 architectural firms and found that in 2010, 60 percent of those polled were optimistic. "That number is up to 73 percent," Cramer said.
He noted that they are seeing an employment growth rate for architects and designers, up from 3.7 percent in 2010 to 5.5 percent in 2011. Similarly, the utilization rate – a 40 hour work week for all staff, increased from 68.5 percent last year to 70.5 percent in 2011.
"Schools are graduating 5,000 bachelor and master's degree students each year. We see an upward trend in optimism for these students, too," Cramer said. Compensation for the newly degreed professionals is flat, however. Bachelor degree earners can anticipate a base salary of $40,044; master's degrees are at $45,266, or a 13 percent increase over those with bachelor's only.
Last year, architectural firms reduced the compensation levels of their staffs by 44 percent. That number is down to 23 percent in 2011, he said.
Architects aren't as old as some people speculate, Cramer said. The average age of a principal is 53; 38 for staff. "Many are delaying retirement due to lost compensation during the recession," he said. The attitude is of growth, he said.
Cramer said that the Greenway Group assesses everything that could change and see what can interrupt the strategy. He asks, "How fast will change happen?"
He said, "We look in the rear view mirror and then we look at what's ahead. Some architectural firms are at the tipping point." Cramer notes that firms are moving away from things like "solo artist and silo disciplines," "baby boomer leadership," and "command and control artists," and moving to such things as "integrated expert teams," "Generation X leadership," and "visionary team leaders."
Cramer presented his design/enterprise model to show how firms succeed. It's a matter of connecting marketing, operations, finance and professional services, with speed, connectivity and productivity.
"Think like revolutionaries, not like victims to take your firm from the past condition to current condition and future condition," he said.
Challenges that disrupt progress cannot be overlooked. "If you are in denial," he warned, "you will suffer the consequences," he said. "Interrupting the life cycle from denial, resistance, commitment and exploration requires rethinking how we do things, develop new strategic imperatives," he said.
Firms that succeed during turbulence, he said, have the best talent, best service and value. They are devoted "servant leaders." "There is meritocracy in compensation and authority, high professional and ethical standards, a culture of excellence and constructive paranoia to trends," he said.
Attitude is a huge driver, but useless without context, he said. "Performance will improve when the old strategy is retooled to fit the new context," he said. He posed five questions to consider:
• Are we more relevant than we were last year?
• What do we change next?
• Why do we do things the way we do? Waste?
• How do others do what we do?
• Are we moving too quickly and deliberately to reach new clients and situations?
He noted that clients, too, are under stress. "More than 9,000 licensed architects are working for companies like IBM. Other companies outsource to architectural firms worldwide," Cramer said. He said that firms need to step up their use of social media and upgrade their brand. "This means improving their image through all collateral material – websites and brochures. Stress the value added their company brings using business metrics," he said.
Opportunities, he said, exist in such things as adopting 100 percent BIM – building information modeling. "Use computer technology to track data. Install meritocracy in your firm. Keep teams small and maintain continuity with clients. Automate everything," he said. Roles blur, he said, with market value. He said that companies like American Campus Communities, which design, build and then manage, are another possibility for architects. "Developers are becoming owners of architectural firms," Cramer said, adding that contractors are also hiring architects.
Architects fail when they play the role of the subservient technician waiting for someone to tell them what to do rather than leading. He said that they can bring design entrepreneurship to engage with university students and faculty.
"Markets, competitors, organizations and technologies are all changing. What are universities changing?" he asked.
Discussion followed, with each architect relating information about the size of his or her respective firm. Cramer said, "Small firms can go up against a Gensler that added 500 people last year. I don't feel that small and medium firms are disappearing if they stay current with technologies being used in new K-12 schools. They must have an entrepreneurial spirit," he said.
Despite the challenges of maintaining a day to day practice and developing the skill set to go after different projects, companies can develop prototypes internally for what they'd like to do. To do so sets the stage for building their own competencies, he said.
Real estate investment trusts are doing well, he said, despite an overall downturn. "Good and socially responsible design does pay. Keep banging on the drum of design, like the AIA," he said.
Cramer suggested that firms "adopt" a professor to keep them in the communication link. "Get involved, lecture, volunteer and adopt a student for an internship. It brings the university and the practice close together," he said.
Steve Kells, who has been in practice for 26 years and employs five architects, said, "The architect of the future will focus on an area of expertise – lighting, acoustics, forensics. There's an entire field in aviation architecture," he said.
Cramer added, "Graduates of this school will be specialists because of these pressures. They can be leaders, too." He said that ownership is in transition because good firms create leaders from below.
Garrett Smith, who has been in practice for 20 years and employs 12, said that as practitioners they are seeing a need for more specialists while their education focuses on generalist training.
Geraldine Forbes Isais, dean of the School of Architecture and Planning, said, "We are seeing more in the student body an ability to recognize the strength of specialization. Early on they talk about design and social issues. They see the transferable skills of design – such as orthotics design. They want to help people through technology, and put a string of things together for a unique market. It doesn't preclude a sense of the generalist. They embrace technology. We are the models for generalists and support them in a fast changing market."
Raymond McClane, of Van H. Gilbert Architect PC, said that overlays, such as LEED, make every project one for specialists and generalists. Van Gilbert, who employs 28, added, "The interdisciplinary people coming into an architectural specialization make it better."
Edie Cherry, professor emerita of the school and 34 year practitioner in a firm that employs seven, said that project management experience needs work. She acknowledged that it is addressed at a certain level in a studio project.
Forbes Isais said, "Project management can't be practiced like a mock trial. Interfacing with clients, focusing on detail and developing people skills are best addressed through an intern development program."
Cramer went on to say that the top 30 U.S. firms received $1.7 billion in fees outside the United States, a 29 percent increase since 1998. "Last year was the most profitable. You can get paid for work in China. Export outside the U.S. only slowed in the recession. Designing cities with populations between 1 and 2.5 million is best done by American professionals. They are still the best in the world. They come from a position of strength as architects and engineers. Generations X and Y want to travel, even being willing to spend four months in India and then home for four months. Thousands of U.S. professionals are doing that around the globe," he said, adding that 50 professional practices subscribe to Design Intelligence. "One firm grew by $30 million in fees last year. Everyone is looking to us for a sustainable future and high solar responsibility. The U.S. has the best architecture schools in the world," he said.
Cramer said that the trend is against outsourcing. "Incentives to off shoring to India don't exist. You can have greater control, but some firms are setting up shop in India and other places, even small and medium firms."
Forbes Isais closed by adding, "We want more of these conversations. They are key in how our professions grow and evolve."
Following Cramer's presentation, the Dean's Council for Design and Planning Excellence held their spring reception. See slideshow.