Archinect
anchor

Promotion from employee to partner?

mtdew

I am a licensed architect with 12 years of work experience. I've been working at my current firm for past three years. I have an active role in the office as the project architect in their biggest project and guiding the younger employees. It's a relatively young firm run by a couple LLP. Both architects. I have received a raise every year and looking forward to another work review this summer and hopefully another raise. 

Work has been steady and I expect that it will only get better as we are having more projects published. 

When I have my next review, I was planning to propose this to the partners. Instead of a raise; my current salary will remain the same but I would have a financial stake in the company by taking a percentage of the company profit. Maybe 5 or 10%? Basically becoming a limited partners and taking a cut of the profits. Kind of like how some tech. start up companies pay their employees. 

There are pros and cons to the partners for this. Pros, it shows my dedication to the success of the firm. Cons; the partners might feel that I'm butting into their business and might not wan t me to know their financial information. 

My benefit would be that I can have a voice on how the office is run. Also, instead of getting a raise every so often until I am capped out; I might be able to get a substantial raise as the firm grows. 

It would like to get your feedback and it would be great to know if any other architects are being paid like this way and if it has worked to their benefit. 

Thanks!

 
Jun 8, 16 11:39 am
chigurh

about a 99% chance it is never going to happen.

Too many factors involved - when you say couple you mean romantically involved?  That company is their baby, and it is highly unlikely they are going to give up control to an outsider that only has 3 years in the firm, no matter how well you have been performing for the company.  

One thing that I have learned is never to expect something to change in an employment situation.  Employers make all sorts of commitments they never intend to follow through on or say in wishful thinking then pucker up when the reality actually presents itself.  

The worst case is when you start to have an expectation of something to happen that is never going to happen and you become frustrated because of it.  I stayed in a job I was miserable in due to the promise of future partnership that I realized was never going to materialize.  It is just not worth your emotional strain.

In addition, you will also take on any debts, problems, bullshit the company has that you are not aware of...add a husband and wife to that equation...forgetaboutit. 

Sounds like you are doing an great job there...I would just keep on pluggin away, take your raise and treat it as a job.  Don't let your expectations run away from you.  

Jun 8, 16 12:20 pm  · 
 · 
JonathanLivingston

I agree with chigurh above. There would be very little reason to do this because they would be taking on more risk then the potential reward. One more party with a plate at the table but your not bringing any food? In exchange for this limited partnership you provide what? The hard work and loyalty you are already providing. These are the base level of employment that's expected of all employees . You need to show that you are bringing work in and contributing to growing the firm not just by helping to complete the work that is already there. At this point you are replaceable regardless of how good your relationships are with employee's and management.

It is your relationship with clients more than anything that will matter towards making a jump into a partnership.

If this is the direction you want to go you should be able to say: I have brought X dollars of work into the company and feel that merits reevaluating our working to reflect that. essentially putting out your continued effort to bring work in as the reason for needing to partner with you. 

the other option would be to show that you are an expert in some aspect of the practice that is essential and will continue to contribute positively to the bottom line. I have seen people make partner this way where say one partner has a skill that is lacking and you fill that whole in their practice. the example of this you see is a design partner vs a business management partner. This is a much harder sell. 

You need to sell yourself either way and it needs to be in a way no other single person out there can do. Otherwise they could just hire that person when you leave...

Jun 8, 16 12:58 pm  · 
 · 
curtkram

there are a couple employers on here who had their employees ask for promotions similar to what you're looking for.  typically it ends with the employee quitting and the firm either falling apart, or struggling with the lack of senior staff.

it seems kind of naive to me that you would want the owners of your firm to just hand you part of their company.  i would think it would be better to talk to them first about whether or not a partnership track is an option.  if that's not how they want to structure their business, then that pretty much stops you there.  if it's something they're open to, then try to get an outline of what path you can take to get there.

Jun 8, 16 1:01 pm  · 
 · 
mtdew

Thanks for your input. I do realize that it is kind of a long shot but I don't think that it's unreasonable and I think that I would still propose it to them. Then it would be their decision to make. 

As an employee I realize that I am not going to get a raise every year. And that there is a salary cap for my position especially at a small firm. And it would be difficult for me to support my family of 4 on a single income and purchase a house outside of NYC. 

Becoming a limited partner seems like the best option for me to reap in benefits of the current upswing economy. I dream about opening up my own firm one day but don't have prospective clients, don't know where to find them, and can't risk not making money.

Jun 8, 16 1:14 pm  · 
 · 
shellarchitect

how much is age a factor?  What if instead of fairly young the current partners were 60ish?

Jun 8, 16 1:25 pm  · 
 · 
mtdew

I have tried to bring in work to the office. They were not design oriented projects but kind of nuts n bolts jobs. And the partners were not  interested. Right now all of our workload is high end residential. 

Curtkram, it is a good idea to not just ask to become a partner but to ask about the possibility of partner track. 

Jun 8, 16 1:28 pm  · 
 · 
chigurh

Sounds like you already created a dream scenario in your mind.  don't.  Can't emphasize this enough:  lower your expectations and you will not be disappointed - especially in employer/employee relationships.  This ask is like going to go all in - if you win you win big, if you lose, you will grow to resent the firm and eventually leave.  curt described the scenario perfectly.  

Jun 8, 16 2:20 pm  · 
 · 
geezertect

10% gets you named in any litigation but no real voting power for the "say" that you want to have in how the firm is run.  I wouldn't even want to be partners with a romantically linked pair like that.  Home problems will inevitably become work problems which will inevitably become your problems.

Jun 8, 16 2:29 pm  · 
 · 
x intern
If you want to work into a partnership go to a big firm. Small firms have no reason to give you ownership unless you have your own clients or you buy in and they make money. If they are doing well they might not even consider letting you buy in. As a small firm owner there is no upside to letting employees get ownership. You might ask if they would consider basing your income on firm profit but you get the risk both ways
Jun 8, 16 2:43 pm  · 
 · 
Sam Apoc

Every reason you list is why becoming partner would be good for YOU.  Frankly, your employers do not care.  This is a business decision for them, and you need to make a good business case as to how THEY will benefit.

As mentioned above, that is tough to do without bringing in your own clients.

Another angle, if they are an older couple nearing retirement within 10ish years is to sell them on making you partner so that you can continue their legacy post-retirement.

Since you said this was a "young firm", if you were interested equity, you should have negotiated that up front when you joined them.  I.E. "I am taking a professional risk by joining a young, relatively unstable firm, and in order to justify that risk, I need to know that I will be eligible to obtain equity in the firm effective the third anniversary of the start of my employment."  This is common in the tech startup world (for highly attractive candidates).

Jun 8, 16 4:12 pm  · 
 · 
mtdew

The benefit to my employer is that as their senior architect with more built experience than themselves; I bring stability to the firm so that the partners can concentrate more on socializing at benefits and attracting new clients. And allows them to be more of a designer rather than getting into the nitty gritty as architects have to. 

You all are correct that any employee is replaceable but it could be a painful process that the employer might not want to deal with. 

Jun 8, 16 5:42 pm  · 
 · 
Carrera

Agree with a lot of what has been said….have seen so many architects die on the vine waiting for their name to be put on the door…an option might be to let your annual meeting take its usual course and after you thank them for the next raise you could offer your interest in something more…you don’t know enough about the business to offer a percentage…offering to broaden your involvement will be a positive ovation, leaving them to offer you the exact opportunity.

Jun 8, 16 11:57 pm  · 
 · 
whistler

I think its worth requesting consideration for a "partnership tracK". I currently am considering that for two of my employees who have been with me for several years and offer the office a deal with their skills, aptitude and passion.  I will retire in time and need to look at secession or selling ht office to them or them buying me out.  Lots of firms just die and so it is worth some consideration but it won't happen quick.  Realistically some phased plan needs to be in place as I am asking that my employees take on more control and management of projects i.e. make the office money and bring in work.  Once you can start to bring in work or make the office money through your management skills etc in some form or fashion you really have some leverage,  if you just design your one of many and can be replaced easily.

Jun 9, 16 12:14 am  · 
 · 
awaiting_deletion

you said high-end residential (bullshit term for NYC, most jobs arent) a couple who brings in design work (most likely wealthy to begin with or academics) - have you seen their books? are you sure they actually make money? there is a good chance you may be the highest earning member in the firm already, you might downgrade yourself by joining? if you get enough nutts and bolts to go on own, go, and then consult at higher rate to this couple. my guess is the firm will fall apart for a bit when you leave if this is your standard NYC high-end residential bullshit firm. they obviosly could replace you and maybe they will lose a job or two in your absence, but as I already suspect they do NOT need the money.

Jun 9, 16 6:43 am  · 
 · 
mtdew

Thanks for all the advice. The general consensus is to be realistic and don't expect too much from my employers at my current situation. I'm not trying to put my name on the wall but i don't want to be a salary man for the rest of my career. So i will ask them about consideration for partnership track and see how they respond. I would regret not asking at all. And what do i have to loose! Btw. I know what you mean by the so called boutique nyc high end firms. Our project budgets for single fam. and apt. renov. Range from $10-60 mil. And we have four of them currently in construction. Their books are more than healthy.

Jun 9, 16 9:07 am  · 
 · 
thisisnotmyname

a mixed salad of thoughts for you:

One response they may have have is "Okay, mtdew, we'll sell you a minority x% stake in the firm for $x.  This happens a lot in my neck of the woods.  Sometimes the asking prices are crazy. Sometimes the current owners will finance you by taking the buy-in amount out of your salary for a number of years, other times it's on you figure out how to pay.

A "partnership track" should have a completely defined set of milestones for you to meet and a strict timeframe everyone agrees to stick to.  A lot of firms tend to procrastinate on this stuff.  Recessions are also used as an excuse to welch on these kinds of agreements.

Like you, I've brought potential work into offices and had the bosses turn it down.  It's super-frustrating.  If at all possible, find a way to do it on your own.  The key to just about everything in this business is having contacts that can give you projects.  Don't loose these people to some other architect just cuz your current boss doesn't want the project.

Jun 9, 16 2:45 pm  · 
 · 
awaiting_deletion

well then, hold them hostage at some point.

Jun 9, 16 10:05 pm  · 
 · 
curtkram

Let us know how it goes

Jun 10, 16 7:55 am  · 
 · 
TIQM

If the firm loses money, would you write a check for 5% of the loss?  

If not, then you really aren't a "partner".  You would simply have a compensation agreement that ties your compensation to the profitability of the company.  Profit sharing.

Jun 10, 16 11:35 am  · 
 · 
mtdew

I don't have the answers to the details because it hasn't been determined. I just know what I'd like to negotiate for. A base salary with a percentage of the profits. No, I don't plan to buy my "share" of the company. But first I would have to ask if the partners if they would consider an employee to be on partner track then that path & compensation would need to be defined. 

Sometime this summer we'll sit down for a talk and I'll do my best to sell myself and we'll see how it goes. 

Jun 10, 16 1:54 pm  · 
 · 

You can always propose. Its a nice way also to gauge your value in the office they way the company sees it.

Jun 10, 16 9:15 pm  · 
 · 
quizzical

mtdew: I recommend that when you meet with the partners you sprinkle the conversation heavily with the word "incentive". Sell them on the idea that a share of the profits would incentivize you to work even harder and to expand the economic pie -- for them, and for you. Otherwise, they'll be inclined to think you're just wanting to take money out of their pockets.

Good luck.

Jun 10, 16 9:37 pm  · 
 · 
curtkram

Maybe you're thinking of a profit sharing program to replace the bonus/ 401k type program they have

Jun 11, 16 10:44 am  · 
 · 
3tk

The only places that offered me equity partnerships were places where I brought in work or were places where they wanted me to be part of a buy out (so they could more or less retire).  The process usually began with a frank discussion on short/mid/long term plan that was in place, how much the risk was (invoices out vs paid, work underway and the margins of profit), and an understanding of how the buy out process works (financial background check, credit check, % of salary going to the current ownership, expectations of client relations and bringing in work). 

If it's a young firm, you better hope you want to be part of that family...

Jun 13, 16 6:42 pm  · 
 · 
marlowe

Gradual share buy-out's seem to be digestable for most small to mid-size firms.

It works like this:  You as the non-partner agree to purchase $x worth of shares each year at an agreed upon price, or a price per share that adjusts annually.  This gives the existing partners additional cash even if the firm profits stay flat and you get to amass shares gradually, over time.  A 3-5 year transition is reasonable. 

Jun 16, 16 3:43 pm  · 
 · 
mtdew

Forgot about this post. Here's an update as I am "working" away on thanksgiving eve while the partners are out. 

During my review I was promised that they will most definitely consider me to be on partnership track. And that they'd need some time to define what that means. 

Four months afterwards. They reconsidered and did not want another partner in their business and decision making. Then I was given a new title with additional benefits & expense account worth about $15k a year. I said thank you and acted to be satisfied. I got bills to pay. Trapped...

Nov 21, 18 3:13 pm  · 
 · 
thisisnotmyname

Are you underpaid at this firm? I suggest you conduct a discrete job search and see how other opportunities compare to your current job.

Nov 21, 18 6:05 pm  · 
 · 
SneakyPete

Ooh, a title...


What the heck is an expense account? Can you use it for booze?

Nov 21, 18 5:17 pm  · 
 · 
OneLostArchitect

What’s the structure of the company? Corporation, LLC etc. They will not offer you ownership without you having some skin in the game. There will be some sort of buy in involved. 

Nov 21, 18 5:25 pm  · 
 · 
geezertect

You may have dodged a bullet.  I would be leery of buying into a firm at this stage of the economic cycle.

Nov 21, 18 6:27 pm  · 
 · 

Block this user


Are you sure you want to block this user and hide all related comments throughout the site?

Archinect


This is your first comment on Archinect. Your comment will be visible once approved.

  • ×Search in: