We are wondering if each one of use should be paid at an hourly rates or each architect should be paid a % of the profit made on each project he is in charge.
Any idea? We do think a remuneration by project could boost productivity.
Non Sequitur
Aug 22, 18 7:54 pm
Individual %s per project is sure to cause some issues. Set everyone at a fixed and common base yearly salary with profit sharing bonuses. This way everyone contributes to one common pot.
( o Y o )
Aug 22, 18 8:12 pm
Welcome to the snake pit. Every potential scenario is problematic at best.
Do you trust your partners? How long have you known them? Do you have a partnership agreement? Do you have any projects? How many licenses?
As Non said, hourly rates against the fee, but what constraints are there to control time? What if one partner hogs the hours? Does the rainmaker deserve a bonus? What happens if the firm has a loss instead of a profit? Does anyone have any experience or specialties and have you divided up work accordingly? I could do this all day long.
Aside from my wife I had one good partner. I worked with him (on and off) for 15 years before partnering. A guy I barely knew (couple of years) partnered with us and was an absolute disaster.
mafl
Aug 23, 18 9:37 am
I do understand that % per project can cause issue. I do trust my partners, but I do think that being paid a % of profit by project could really boost productivity. The real issue is that I consider that my partners are not working at 100% of their capacity. We have been working together for a few years now. When I look at the time worked on each project, I see clearly that all of my partners spend about 50% more time then I do on similar project. That's why I am asking myself about the renumeration method.
Non Sequitur
Aug 23, 18 9:46 am
So you're looking to increase your take of the common pot because you view your business partners as less efficient. Yeah, pretty damn certain this will end in a disaster.
mafl
Aug 23, 18 10:10 am
Yes, I fear the disaster.
SpontaneousCombustion
Aug 23, 18 2:42 pm
This is funny, because a firm I used to work at had a partner who was dissatisfied and wanted to change the % that he got vs his partners, on the basis that he was putting in far more billable hours than they. You're arguing for the opposite, based on your self-perceived comparitive efficiency. Either analysis of worth could be right or wrong, depending on all of your values, work styles, and preferences.
Wilma Buttfit
Aug 23, 18 10:05 am
Some projects are just more profitable than others regardless of efficiency. That stuff gets evened out at the firm level and rightfully so. What if you get stuck on a bad project and then you have to suffer in your personal finances too? What about the other measures of success such as client satisfaction?
I agree though that working on a per unit basis will drive productivity up. I did some work with another architect where we split the tasks up like a menu and put a price tag on it (zoning analysis: $xxx, draw as-builts: $xxx, etc) and then we picked and completed the tasks as we went. We used the menu to draw our pay from the total fee. Worked pretty good. We were two sole proprietors in two different states, not a firm. Some of the tasks were worth more than others. We used a lot of trust and didn't nitpick anything, just did it. We were both happy. It makes for an interesting model, not sure I've heard of anyone else doing this. We made it up.
mafl
Aug 23, 18 10:10 am
The menu method seems very interesting. How did you fixed the proce tag on each item? Just by discussion and mutual agreement?
Thank you
Wilma Buttfit
Aug 23, 18 10:18 am
We just made it up. Mostly I did it and then if the other person didn't agree we negotiated but that didn't really happen because we didn't pick at it. We some things figured out beforehand and some things we made up as they came up. Then actually, we would adjust as we felt. Like I said, we didn't pick at it and argue cause that would have been awful, we just did it, focused on the work and not the fee and we were both happy.
( o Y o )
Aug 23, 18 12:04 pm
When you're working on time there is no financial incentive to be efficient. Especially when profit is split 5 ways. 20% of zero is zero. Think I'll wrack up the hours instead. Solution: time paid at minimum wage.
tintt's model is interesting. Good luck getting it to work with five principals.
What you describe is all Chiefs, no Indians (apologies for the lack of a better metaphor).
whistler
Aug 23, 18 12:52 pm
Love to watch this train wreck...but could be a good reality TV series!
Non Sequitur
Aug 23, 18 1:59 pm
agreed. I don't think the OP realized that he/she's more likely to be the cause of said wreck.
whistler
Aug 23, 18 3:23 pm
not to mention how the quality of work would suffer based upon everyone doing the absolute minimum possible.
whistler
Aug 23, 18 3:46 pm
Note to interns; don't look for work at this office unless you like really toxic environments
whistler
Aug 23, 18 3:46 pm
Note to lawyers; have I got a job for you!!!!
Bloopox
Aug 23, 18 3:46 pm
With 5 partners, assuming you all don't fail and/or kill each other within the first few years, you're going to find out eventually which ones of you are going to be partners who like and/or have more aptitude for the myriad unbillable facets of operating a firm - everything from marketing to staff management to comparing contracts for carpet cleaners for your office - vs. which ones of you secretly wish you hadn't become partners and would rather just keep designing, drafting, and/or managing projects forever and don't want to deal with the financials and the 401k's and the parking lot situation. At least one of you is going to drop to less than 40% billable because he's spending half his time on hiring/firing/training/selling... while at least one of you will probably be more than 80% billable because he keeps his head buried in drawings all day and never looks up, and the rest of you will be somewhere in between.
If you tie your compensation to individual projects then you're not really behaving in the spirit of partners - and under that arrangement nobody is going to ever want to stop what he's doing on Project X to address the disgruntled bookkeeper, take out the trash, or renegotiate the lease. It's a bad arrangement. Don't do it.
We are a young firm composed of 5 architects.
We are wondering if each one of use should be paid at an hourly rates or each architect should be paid a % of the profit made on each project he is in charge.
Any idea? We do think a remuneration by project could boost productivity.
Individual %s per project is sure to cause some issues. Set everyone at a fixed and common base yearly salary with profit sharing bonuses. This way everyone contributes to one common pot.
Welcome to the snake pit. Every potential scenario is problematic at best.
Do you trust your partners? How long have you known them? Do you have a partnership agreement? Do you have any projects? How many licenses?
As Non said, hourly rates against the fee, but what constraints are there to control time? What if one partner hogs the hours? Does the rainmaker deserve a bonus? What happens if the firm has a loss instead of a profit? Does anyone have any experience or specialties and have you divided up work accordingly? I could do this all day long.
Aside from my wife I had one good partner. I worked with him (on and off) for 15 years before partnering. A guy I barely knew (couple of years) partnered with us and was an absolute disaster.
I do understand that % per project can cause issue. I do trust my partners, but I do think that being paid a % of profit by project could really boost productivity. The real issue is that I consider that my partners are not working at 100% of their capacity. We have been working together for a few years now. When I look at the time worked on each project, I see clearly that all of my partners spend about 50% more time then I do on similar project. That's why I am asking myself about the renumeration method.
So you're looking to increase your take of the common pot because you view your business partners as less efficient. Yeah, pretty damn certain this will end in a disaster.
Yes, I fear the disaster.
This is funny, because a firm I used to work at had a partner who was dissatisfied and wanted to change the % that he got vs his partners, on the basis that he was putting in far more billable hours than they. You're arguing for the opposite, based on your self-perceived comparitive efficiency. Either analysis of worth could be right or wrong, depending on all of your values, work styles, and preferences.
Some projects are just more profitable than others regardless of efficiency. That stuff gets evened out at the firm level and rightfully so. What if you get stuck on a bad project and then you have to suffer in your personal finances too? What about the other measures of success such as client satisfaction?
I agree though that working on a per unit basis will drive productivity up. I did some work with another architect where we split the tasks up like a menu and put a price tag on it (zoning analysis: $xxx, draw as-builts: $xxx, etc) and then we picked and completed the tasks as we went. We used the menu to draw our pay from the total fee. Worked pretty good. We were two sole proprietors in two different states, not a firm. Some of the tasks were worth more than others. We used a lot of trust and didn't nitpick anything, just did it. We were both happy. It makes for an interesting model, not sure I've heard of anyone else doing this. We made it up.
The menu method seems very interesting. How did you fixed the proce tag on each item? Just by discussion and mutual agreement?
Thank you
We just made it up. Mostly I did it and then if the other person didn't agree we negotiated but that didn't really happen because we didn't pick at it. We some things figured out beforehand and some things we made up as they came up. Then actually, we would adjust as we felt. Like I said, we didn't pick at it and argue cause that would have been awful, we just did it, focused on the work and not the fee and we were both happy.
When you're working on time there is no financial incentive to be efficient. Especially when profit is split 5 ways. 20% of zero is zero. Think I'll wrack up the hours instead. Solution: time paid at minimum wage.
tintt's model is interesting. Good luck getting it to work with five principals.
What you describe is all Chiefs, no Indians (apologies for the lack of a better metaphor).
Love to watch this train wreck...but could be a good reality TV series!
agreed. I don't think the OP realized that he/she's more likely to be the cause of said wreck.
not to mention how the quality of work would suffer based upon everyone doing the absolute minimum possible.
Note to interns; don't look for work at this office unless you like really toxic environments
Note to lawyers; have I got a job for you!!!!
With 5 partners, assuming you all don't fail and/or kill each other within the first few years, you're going to find out eventually which ones of you are going to be partners who like and/or have more aptitude for the myriad unbillable facets of operating a firm - everything from marketing to staff management to comparing contracts for carpet cleaners for your office - vs. which ones of you secretly wish you hadn't become partners and would rather just keep designing, drafting, and/or managing projects forever and don't want to deal with the financials and the 401k's and the parking lot situation. At least one of you is going to drop to less than 40% billable because he's spending half his time on hiring/firing/training/selling... while at least one of you will probably be more than 80% billable because he keeps his head buried in drawings all day and never looks up, and the rest of you will be somewhere in between.
If you tie your compensation to individual projects then you're not really behaving in the spirit of partners - and under that arrangement nobody is going to ever want to stop what he's doing on Project X to address the disgruntled bookkeeper, take out the trash, or renegotiate the lease. It's a bad arrangement. Don't do it.