Managing HR and Gaining Operational Efficiencies at Architectural Firms

As a leader of an architectural firm, it's your role to interact with clients and your team and work hard to manage expectations and deliver on performance commitments. Managing scarce resources with competing priorities and deadlines can be challenging. As a leader, you are also required to inspire a motivated group of full-time, part-time and contract employees to be as productive as possible so you can drive growth and manage and reduce costs.  

Being in charge can come with paperwork and administration, taking you away from your core business. Processing payroll, complying with local, state, and federal laws and regulations, mitigating risk and offering competitive compensation and benefits are skills that require time and resources. 

To learn more about the impact of HR administration on architectural firms, we conducted a study* of 125 leaders across the United States. The study addressed the time leaders spend on HR duties, the competitiveness of employee benefits and their ability to attract talent, the use of technology to streamline routine tasks, and the prospect of outsourcing HR to gain efficiencies. We invite you to read on to learn about the study highlights.

Sixty-Seven Percent of Leaders Spend 10-Plus Hours a Week on HR

Our survey found that many firm leaders (67%) spend more than 10 hours a week managing payroll and other HR administrative tasks and duties. Eighty-four percent of firms operating for 10 or more years spend more than 10 hours a week on HR administrative tasks and responsibilities, compared to only 56% of firms operating for less than 10 years. Time spent on HR tasks and duties can take your focus away from the core business, your clients, and your team.

Time Spent on HR Administration

• 6% said 5 or fewer hours
• 27% said 6 to 10 hours
• 49% said 11 to 15 hours
• 15% said 16 to 20 hours
• 3% said more than 20 hours

Employee Management Presents Challenges

We also learned that 70% of leaders shared their main dislike about managing people as "Employees have personal issues that sometimes conflict with work," and 51% said, "The quality of work is not always up to par." More than one in two (52%) said, "It takes up a lot of my time," and 35% said, "It's easier for me to do the work myself." 
Other feedback received from leaders about their challenges related to managing employees include:

• "Aligning the team with priorities and keeping them focused on the task at hand."
• "All the rules and regulations that must be followed."
• "Attracting and retaining staff."
• "Fulfilling employee demands related to facility and safety."

Tackling HR, Benefits and Hiring

Keeping Compliant With Employment Laws is Difficult

Our survey revealed that maintaining compliance with ever-changing laws and regulations is a challenge for many architectural firms, with more than one in two (56%) reporting, "We do the best we can on our own, but it's a struggle." Fifty-two percent of respondents said they "work with an outsourced HR advisor/vendor to help us stay compliant," and a further 62% said they "monitor all relevant laws and regulations and rule changes ourselves." 
More firms anticipating business growth in the year ahead (62%) reported that "We do the best we can on our own, but it's a struggle," compared to 51% of firms that were not anticipating business growth.

Employee Benefits Offerings Struggle To Compete With Competitors and Larger Firms

Sixty-eight percent of the survey respondents believe the benefits offered to their employees compete with their competitors, and 66% thought their benefits could compete with much larger firms. If they could change one thing about their benefits offerings, 61% of leaders want to "provide options that are less expensive for employees." 
Eighty percent of firms anticipate business growth in the year ahead. For the 76% of firms operating for 10 years or more, and the 75% of firms with 50 to 100 employees, these firms were more likely to report their employee benefits could compete with large employers.

Leaders do well With Hiring Talent

Ninety-eight percent of leaders said they were "very effective" or "somewhat effective" at attracting and retaining competent management and staff for their firm. Nearly all respondents had some formal process to recruit talent into their company. 

Managing Employee Performance is Fraught With Challenges

Probing a little deeper, we asked how challenging it is to manage employee performance, and help staff understand what is expected of them each day. We learned that many regular performance management activities were reported as "very challenging" for the company leaders, including:

• 27% reported they were challenged with regular performance reviews;
• 27% reported they were challenged with regular one-on-one meetings; and,
• 27% reported they were challenged with providing ongoing ad-hoc feedback. 

From the research findings cited earlier, we already know that managing people and performing HR administrative tasks and duties takes a lot of time. Therefore, it would be safe to assume that managing employee performance and providing regular feedback would only add to this workload.

Using Technology to Manage HR

Our survey found that leaders of architectural firms reported using a median of three systems to manage HR tasks such as benefits administration, hiring and onboarding, payroll processing, performance management and tracking time and attendance. The mean number of systems used was six, but the median was distilled to three systems for each architectural firm due to a few heavy outliers. The more prominent and more mature the firm, the more they were likely to use twice as many technology systems as newer firms.

Leaders need access to intuitive technology that seamlessly delivers actionable data, dashboard reporting, intelligent information and prioritized actions. For example, companies could benefit from integrated, cloud-based technology to provide greater agility by simplifying complex HR administrative tasks, freeing up time and resources and creating more efficient processes.

Systems Need To Focus on the Employee Experience

The top priority for HR technology-related functionality would be an employee-centric user experience, followed by mobile-responsive, and ADA-compliant.

HR Outsourcing Expected To Rise

While 56% of the survey respondents had some experience outsourcing their HR administrative activities, 66% said they are "very likely" or "somewhat likely" to outsource them in the next 12 months.
The more mature the firm, with a large employee base and optimistic business outlook, the more likely they were to consider outsourcing HR administration in the next 12 months.
How likely is it that your firm will outsource any HR administration tasks in the next 12 months? (Very likely/somewhat likely)

• Business outlook: growth    74%
• Business outlook: no growth    60%
• Firm age: < 10 years    61%
• Firm age: 10+ years    74%
• Firm size: 10-49 employees    65%
• Firm size: 50-100 employees    68%

The top three tasks that leaders would like to outsource include "payroll administration" (64%), "benefits administration" (55%) and "recruiting and onboarding" (52%).

Improving HR Efficiencies 

Our survey identified the top three HR administration areas anticipated to become more challenging over the next 12 months were "managing the hiring process and tracking applicants" (67%), "creating operational efficiencies with overall HR administration" (66%), and "attracting competent management and staff" (63%).

No matter how large or small, mature or less experienced, or varied their business outlook, all leaders were more concerned with "managing the hiring process and tracking applicants," "mitigating risk by creating a safe place to work," and "creating operational efficiencies with overall HR administration" as the most pressing challenges on the horizon for the year ahead.

Helping Firm Leaders to Navigate the Path Forward

Based on this research, it would seem that the architectural firms' leaders effectively execute their many HR priorities. Still, those responsibilities can take up a lot of time. This is time away from focusing on the firm's core business, serving clients and investing in employees. 

Architectural firm leaders reported struggling to attract and retain staff and offer them competitive compensation and benefits. Revenues are under pressure. Is it time to outsource HR administration so you can stay focused on what's most important for your clients and employees?

Professional employer organization (PEO) services from Paychex help manage your day-to-day while gaining access to employee benefits and HR expertise your business might not otherwise be able to afford.

Using this model, many businesses group together to gain the buying power generally associated with large corporations and secure a complete portfolio of employee benefits and HR expertise for all its members.

By working with PEO, you can gain significant cost savings and efficiencies , including:

• Savings on average of up to $1,755 per employee per year
• 63% lower health benefit costs
• 30% lower workers' compensation claims
• 30% lower unemployment insurance costs
• 20% lower employee turnover
• 5% higher revenue growth
• Fewer concerns about hiring, retaining, and motivating employees

Savvy leaders outsource HR administration tasks to be freed up to focus on enriching the client experience, driving growth and managing a great workforce. Paychex HR solutions provide a personalized experience for thriving and diverse workforces. Throughout the entire employee life cycle, we support you with help attracting and developing talent, payroll and benefits, to maintaining regulatory compliance.

¹ 2019-white-paper---roi.pdf (napeo.org)

*About the survey:  This survey was conducted with 125 principals (e.g., owner, founder, CEO, president, partner, etc.) of architectural firms in the United States who employ between 10 and 100 employees. The online interviews took place from September 11 to 28, 2020, by Bredin, an independent market research company located in Boston, MA.