Management and management structures

A clear and simple management structure is important for the smooth working of a practice and essential for the efficient and correct running of the projects that pass through it. Clear roles and responsibilities help ensure job satisfaction for management and employees alike. Good communication is arguably the most important factor in good management, and engenders a sense of belonging and loyalty to a practice. Structures should be established to manage both the work and the business. Understanding who does what is vital.

When a practice is first formed it is common for the owners, who will often be relatively young and fired with enthusiasm and possibly experienced in project organisation but rarely experienced in practice management, to act instinctively. Communication tends to be good, as staff numbers are low, and is usually verbal and direct, with little need to commit things to writing.

While the legal responsibilities of partners in a partnership or limited liability partnership vary slightly from those of directors in a company, the practical day-to-day management needs of the practice and the work flowing through it are similar.

The division of roles between the partners/directors will often happen naturally in the early days of a practice’s existence – one may be responsible for the financial organisation of the practice, another for the quality of the work being issued, another for staff, and so on. Of course, in solo practices a single person has to be responsible for all of these, although may well employ accountants and others to undertake various aspects of business management.

As a practice develops and grows it may wish to consider employing non- architects to perform some of these roles to allow the architects more time to secure and undertake commissions. It is important to note that the appointment of others does not relieve the partners/directors of their overriding responsibilities for these issues.

There are a range of issues surrounding practice management that need to be considered by the partners/directors of a young practice if it is to grow and eventually move smoothly into a successful second generation once the founders decide to retire. These are commonly known as ‘succession issues’ and at a minimum the principles of these should be considered early in the life of a practice, preferably at its inception, as they can inform the structure of the practice.

Among these will be:

• What do the founder partners anticipate they will want to do when they no longer wish to be involved with the practice?

• Do they have any idea of when they will wish to effect these changes? This might be by reference to age or to a set of circumstances.

• What do they wish to get out of the practice in return for their investment over time (cash, pension, ongoing consultancy, etc.)?

• Who will they wish to pass the management and ownership of the practice on to? This may be by reference to type of person – all staff, key individuals, someone outside the current business – rather than by individual. As time passes the founding partners or directors will need to identify and prepare those who will take over responsibility to ensure a smooth transfer.

It is important to understand the difference between the roles of the owners of the practice and those charged with managing it – the directors or partners. Owners have the ultimate sanction of getting rid of its senior management but, until they do, the directors/partners have full authority to manage the practice, including deciding what work they will undertake, who they will employ to do it, including themselves, and how they will reward them. Owners can receive dividends based on their individual shareholding in the case of a company.

There are various legal responsibilities on partners/directors, and it is important that all these are fully understood. Key among them is not to trade insolvently, i.e. be unable to meet their obligations to pay those from whom they have purchased services or goods.

The partners/directors are ultimately responsible for all that happens within the practice, although they may devolve certain responsibilities to others.

Practically, these include:

• Establishing an overall vision/series of objectives (see Section 5.4: Where do we want to be?).

• Setting strategies to achieve these objectives (see Section 5.5: How do we get there?).

• Implementing or appointing others to implement these strategies. • Managing the financial performance of the practice (see Section 7.3:

Establishing a financial system).

As noted above, it is common when a practice is first formed, or in solo or small practices, for the partners/directors to perform all the necessary management functions, and there is no need to establish a structure. However, as the practice grows it will need to organise itself into:

• Directors – those with a practice-wide responsibility for objectives, organisation and management.

• Managers – those with responsibility for organising and managing the work, architectural and other, as it progresses through the practice. • Others – those who will actually do the work.

Management structures can be as simple or as complex as the needs of the practice demand, though with a general recommendation to keep them as simple and as clear as possible. The management tier is commonly accorded titles such as ‘Divisional Director’, ‘Project Director’ or ‘Associate Director’. The roles and responsibilities that sit with these titles should be clear to the entire staff, as should the reporting structure through the practice.