The gut reaction in some A/E firms is to first ‘fire all the administrators,’ a statement made by Frank Stasiowski in an article advising on how to get through the 2008-11 recession. Here is why that’s bad advice.
Now, more than ever, administrators have specific skills and duties that are always necessary, such as project administration, spec preparation, payroll, finance, as well as the specialized software knowledge to manage all of those functions such as Newforma, Vision, Ajera, Masterspec, and Quickbooks. They’re also the ones who maintain a relationship with your bank’s loan officer for your line of credit, manage your Accounts Receivable and Accounts Payable. So why would they be the first to go? The business of architecture and engineering has become much more complicated since 2011. Keeping the business personnel in your office allows you, the design professionals, to do what you do best--design. Isn’t your time better spent reaching out to clients, asking if they’re in need of anything, such as help on scheduling issues, coordinating with other consultants or construction firms on their behalf, rather than collecting timesheets and making sure the billing still goes out? Your business personnel are the ones with existing knowledge and relationships with the bank and insurance companies. The first thing that happens in a down economy is construction companies start filing lawsuits. That’s when you need access to A|E business networks like SDA. Why spend your valuable time trying to get up to speed in any one of those areas? The COVID19 virus pandemic is a marathon not a sprint, and just as it is hard to find good architects and engineers (heck any architects and engineers), it is very hard to find an administrator who knows Vision or Ajera. Ask more of your administrators, yes, just like you’re going to ask more of your technical personnel to compensate for possibly sick personnel or family members but maintain your staff levels. Everyone in your firm is probably more capable than you think, when asked to step up. Let’s all step up together.
Share the Pain. Wouldn’t it be fairer for everyone to take a 10-15% pay cut or reduce everyone’s hours by 10% and keep the family that is your firm working hand in hand to overcome this challenge? Come August or September when things start getting back to normal and everyone is in a rush with accelerated schedules, do you really want to spend time and energy hiring and training new people? The new OASDI or social security tax relief passed today will provide you with some relief. The example below shows that the new legislation just passed could save you $120,000 or the salary of at least 2 or 3 of your lowest paid employees for a 20-person firm.
$5,000,000 gross revenue
$3,000,000 net revenue
$2,100,000 labor expenses
$1,575,000 labor expenses last 3 quarters
$120,488 7.65% of labor – savings under new tax relief
And, you also do not want your unemployment coefficient to go up because your fired employees file for unemployment. The these firings will follow you for three years into the future.
Think long-term. Some of the strategic planning tasks administrative staff can be working on:
- Have marketing brush off or write a 5-year marketing plan. Research new project types you’re interested in pursuing
- Have accounting write up accounting manuals – especially in the event this crisis lasts longer than we think. There are no accounting manuals for Ajera, Vision, or QB out there.
- Have human resources keep up with all available information on the business aspects and effects of the COVID19 virus. Examine your employee handbook and note any policies that are in discrepancy with practices you’ve implemented to adapt to the situation. Write a pandemic policy for now and the future.
- Clean up those databases, libraries, storage unit, employee files, plan files
- Develop standards for CADD.
- Emphasize over-looked training and new certifications that will position individuals and the firm in a better place when the pandemic ends.
Take the Lead. Show your clients and employees you have the business savvy to weather this storm.
What are your firms doing to weather the storm? Share your ideas in the comment box below.
Deborah Gill, CPA, FSDA is the Owner of Profit by Design in Norfolk, VA