President of Bernardon (Hot Firm #39 for 2018), an 80-person architecture, interior design, and landscape architecture firm based in West Chester, Pennsylvania.
By Liisa Andreassen
“Keeping everyone focused on the big picture when we are working hard to meet short-term project deadlines,” says Haber, referring to his number one role at the firm.
A CONVERSATION WITH KERRY HABER.
The Zweig Letter: With technology reducing the time it takes to complete design work, how do you get the AEC industry to start pricing on value instead of hours?
Kerry Haber: This is a topic that we’ve struggled with for many years. Finding knowledgeable clients who appreciate and understand the value that we as architects and designers bring to the design and construction process is the key. One could say it’s a matter of “educating” those clients who have not had experience working with an architect by making them aware of what we do. We find that with repeat clients it’s an easier “sell” because they’ve observed the value that we bring to their projects. When the project scope is well defined, we prefer to work on a fixed-fee basis, which takes hours out of the equation. However, when the project is not well defined, we find that hourly invoicing is still the most equitable arrangement.
TZL: If the worker shortage continues, do you see wages increasing to encourage more talent to enter the AEC space, or will technology be used to counter the reduced work force?
KH: I already see wages increasing because of the shortage of experienced architects. Technology has increased productivity significantly over the past 10 years, but it can only take you so far. It’s the creative talent of the design staff that makes a firm successful.
TZL: Do you tie compensation to performance for your top leaders?
KH: To encourage collaboration during design and sharing of leads during business development, we do not tie principals’ compensation to specific performance metrics. All of the principals share in the success of the firm. For senior staff who are not principals we have an MBO (Management by Objective) program, where bonuses are calculated on achievement of mutually agreed upon annual goals.
TZL: Do you share base salary or bonus amounts with your entire staff?
KH: We believe that salary is a very personal matter and should be confidential. Compensation of each staff member is based on the individual’s talent, experience, and performance. We do not have a salary “scale” that is shared staff-wide.
TZL: Have you ever closed an under-performing office? If so, tell us about it.
KH: We have never had to close an office for under-performance, but during the recession in 2008-2009, we did consolidate operations by cutting back from three offices to two.
TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?
KH: We do not have a minimum number of years of experience for someone to become a principal. This is a position that is earned by proven performance and there is no timetable. Likewise, there is not a quota or threshold in terms of a certain amount of business generation. Regarding age, I became a principal at 37 and our most recent principal achieved that position in his early 30s. Age will not be a factor in naming future principals.
TZL: When did you have the most fun running your firm, and what were the hallmarks of that time in your professional life?
KH: The most challenging and rewarding timeframes have been during times of rapid growth. During my tenure at our firm, we’ve had several periods when business needs required us to accelerate the hiring of new staff and to expand our office space. This occurred at the same time we were doing larger and more complex projects. These times have been both energizing and rewarding.
TZL: How do you promote young and new leaders as the firm grows?
KH: We try to encourage professional growth for individuals and provide them with opportunities to grow. Our legacy is to allow people to “reach” for personal growth as opposed to handing it to them. It really is a function of the initiative and drive of the individuals, and when that is present, we welcome it with open arms.
TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?
KH: Keeping everyone focused on the big picture when we are working hard to meet short-term project deadlines.
TZL: What happens to the firm if you leave tomorrow?
KH: We use a lot of collaboration and consensus in managing the firm. While there would be a period of adjustment, I have confidence that my fellow principals would be able to run the firm in my absence.
TZL: There is no substitute for experience, but there is pressure to give responsibility to younger staff. What are you doing to address the risk while pursuing the opportunity to develop your team?
KH: We deal with this issue on a daily basis. We find that most clients are not interested in a “learning experience.” We’re working on enhancing our continuing education and mentoring program so that younger staff can shadow more experienced staff and learn from that observation. With challenging deadlines, that can be difficult, but it’s critical to our future success.
TZL: Architects love being architects, but what are you doing to instill a business culture in your firm?
KH: From the founding of our firm, we’ve been keenly aware of the fact that we are a business and we must monitor our costs as well as our clients’ costs. Our many developer clients help us focus on the importance of cost. We continue to keep our staff aware of fee structures and hourly rates along with the ongoing challenge of balancing fees with our design creativity.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
KH: We’ve had the good fortune over the years to have a diverse workforce relative to age, gender, race, and ethnicity. Specifically, as more women have been entering the field of architecture over the past several years, we’ve seen many more female candidates applying for positions. As a result, the percentage of women in the firm has grown – today our staff is 44 percent female. Using national resources such as the AIA has helped us recruit international employees; some of whom we have assisted in the visa process. Additionally, we encourage our current staff to be our recruiters and ask them to recommend the firm to people they know and respect. This is especially helpful relative to our recent graduates and we believe this will continue to increase our diversity.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
KH: One of the hallmarks of Bernardon over the years has been the long tenure of many individuals. We do not have a “hire and fire” mentality, and I believe that the turnover in our firm is well below the industry average. We let new hires know that we’re investing in them and that we hope they will reciprocate by staying with us. We treat our people fairly and make the firm a good place to work, and that has resulted in many of our staff staying with us for a very long time. This sets an example for younger staff and makes us an inviting place to work and build a career.
TZL: Benefits are evolving. Are you offering any new ones due to the changing demographic?
KH: Recently, we’ve implemented a change from vacation and sick time being separate to a paid time off policy, where these are combined into one benefit. The intent is to give our staff more flexibility in how they handle their time off and for those employees who are fortunate enough to stay healthy and not get sick to not forfeit their sick time. We want to give people an opportunity to strike a balance between their work and personal life. Time off is important to recharge, so our policy limits the carryover of PTO from year to year to encourage people to take their vacation time.
TZL: Tell us about the last time you named a new principal from outside the firm.
KH: Currently, we have seven principals – six of whom worked at the firm for a number of years prior to becoming a principal. Historically, we’ve found that to maintain our culture, it pays to give prospective leaders some time to get to know us and vice versa. We did make one exception to that policy 15 years ago when we named a new principal from outside the firm. That situation involved merging that person’s sole proprietor firm into our larger firm. Because we had joint ventured on several projects over a multi-year period, we were very familiar with each other, and it has worked out exceptionally well.
TZL: How are the tariffs impacting your business and that of your clients?
KH: We see the unpredictability of costs creating significant problems for our clients in terms of their procurement of materials for construction. However, we have not had any clients change their strategy specifically as a result of the tariffs.
TZL: How are the tax cuts impacting your business? Have salaries and bonuses increased?
KH: The federal tax cut has had no impact on salaries and bonuses within our firm. When the economy does well, so do we. When the economy falters, it has a direct impact on our business. For the last 10 years, since the depth of the Great Recession, we’ve been on a continuous upward track. At this time, we’re carefully monitoring market conditions and trying to prepare for a recession, whenever it may occur.
TZL: How have the tax cuts impacted your firm’s valuation? Do you plan on doing another valuation due to the tax cuts?
KH: The tax cuts have not directly impacted our firm’s valuation. We do a valuation on an annual basis as a matter of policy; we feel it’s a good practice.
TZL: Are you currently pursuing the R&D tax credit?
KH: No, but we are open to the opportunity in the future.