Collective shareholders

17 Apr 2007

Should an architectural practice’s structure reflect the collective endeavour of all of those involved in its work? Has the traditional arrangement of partners and associates run its course? Penny Lewis talked to Jude Barber and Gerry Hogan of Collective Architecture – the new name for Chris Stewart Architects – to find out how the practice is coping since a major internal re-organisation which gives every full-time member of staff an equal stake in the business.

WHEN Chris Stewart established his architectural practice ten years ago, it was a one-man outfit running out of an office off Dumbarton Road in Glasgow. He had no idea that the business would expand so rapidly, outgrowing the original office to become a practice with 15 members of staff – the average age is about 30, with a 40:60 mix of women to men – and a healthy client base, mostly in the public sector. A couple of years ago, Stewart started a conversation with staff about changing the character of the business. Stewart and fellow director Gerry Duffy were very keen that the title of the practice and its internal organisation should reflect the collective work of the staff. It’s not a new idea – throughout the last decade the idea that a practice should be named after its founding or controlling partners has given way to a trend that favours punchy names or a collection of numbers and letters. However, Stewart was keen not just to spread around the intellectual credit for the work done by the team, but to share the responsibility and financial success too. This approach is not entirely novel either, In fact, some other Scottish practices are looking at similar arrangements. Malcolm Fraser’s practice will shortly shift from a partnership structure to a more collective arrangement, while Make, Ken Shuttleworth’s practice, operates on the principal that staff are shareholders rather than employees. And even as far back as the 1970s, Ted Cullinan established his practice as a form of collective. However, taking an existing practice and changing its internal organisation and business structure is not a simple task. The transformation of Chris Stewart Architects to Collective Architecture has been a lengthy process, primarily for legal and commercial reasons. There are co-operative models, but as the business was already a limited company with existing obligations, the change became more complex. The team were also keen to ensure the changes didn’t cause any problems for the existing client base. Collective Architecture has ten projects on site over the next year and an annual turnover that has grown consistently over the past few years to sit at about £500,000. While housing remains at the core of its work, the practice is winning increasingly demanding commissions. Jude Barber was recently made a director of the practice, and she played a central role in the reorganisation of the practice. “The change will hand more responsibility to the staff,” she says. “It’s not just about running jobs, it’s about leadership and providing a framework. It’s been quite a special process and the result is a more honest reflection of what we do.” While the change clearly represents a radical departure for the practice, it has been described as a “subtle process” which involves simply formalising what has already happened. “Architects don’t have many employment perks,” says Barber’s colleague Gerry Hogan. “What is really important is intellectual property, and that’s a collaborative product.” Under the new collective arrangement, the practice will remain a limited company and retain its company number and all of its existing commitments. According to Barber, the aim of the transfer of power is to keep individual share ownership low and individual control high. The three directors will remain responsible for the day-to-day running of the practice, and will present a financial update to the staff each quarter. Responsibility for other areas of work will be led by groups of staff brought together to address particular issues. At present there is a group concerned with the new organisational form, a group dedicated to technical research and to double-checking the technical performance of all the design work that leaves the office. There are also groups for public relations and winning new commissions. “Just because we’re a collective it doesn’t mean we’re going to be any less focused in our work,” says Barber. The practice talked to a few lawyers before developing a clear idea of what the best possible arrangement would be. It has worked with the MacRoberts company lawyer section and financial and tax department to establish a new organisational framework. The government has a share incentive plan in which the employees have a small stake in the company, but Collective Architecture was keen to give everyone involved in the business an equal share. The shares will be managed by an employee benefit trust. One of the difficulties of the new system is that it is hard to give away money without incurring tax, so the ownership of the practice has been transferred to an employee trust in which all staff have an equal share. Everyone who works for the company for more than three days a week for a year will automatically become part of the trust, but if you leave the practice, you don’t take your shares with you. This trust holds the majority of shares of the company and holds 95 per cent of the voting power over the business. Over the next five years some of the shares of the company will be drip fed into a collective share incentive plan (SIP). The SIP is managed by a minimum of three and a maximum of five trustees. The SIP has no influence over the day-to-day running of the business. This arrangement allows the practice to distribute value from the existing company without having to pay additional tax on it. The practice will continue to reward longevity and experience and pay staff for overtime work, but it also plans to flatten out the salary structure. This involves freezing the salaries of the highest earners and bringing up the lowest earners. The directors are appointed on an annual basis. A reserve fund will be established which will cover a full year’s worth of company outgoings. On the first day of each year, any surplus over the reserve will be distributed equally among the shareholders. The new branding was produced by Scratch Design. The graphic designers produced a bespoke font for the practice – each letter takes up exactly the same amount of space, symbolic of the equal status of their shareholders. In addition to the new logo, the practice is relaunching the website and producing business cards for the first time. So far so good then, but isn’t there a danger that the collective will find it hard to agree about what kind of work they should undertake – particularly if some of that work is speculative? “We don’t bid for PPP work,” says Barber. “We’ve never had an overdraft or loans. And Chris is a very savvy businessman, so most of our work is profitable and we have a low turnover of staff.” The practice does not have a house style – what binds the staff together is a commitment to a certain approach. They share an enthusiasm for mixed use, the re-use of materials and the creation of buildings based on simple colour and form. The practice is genuinely committed to sustainability and participation. “Our practice approach is to give the client what they want, and that is why there is very little wastage in our work,” says Barber. At one of Prospect’s first meetings with Chris Stewart he introduced himself as “a sustainable architect”, then in all seriousness added: “Even this suit is recycled – it came from Oxfam.” Stewart doesn’t like to stand on ceremony and is almost playful in his public persona. However, he is not naïve. But neither is he cynical – he has a certain idealism and desire to do the right thing. The rest of the practice members seem to share his sense of commitment as much to the process of making architecture in collaboration with the client as in crafting a body of work. “There tends to be an emphasis on product rather than process,” says Barber. “If you get the process right it should be good architecture. Architecture shouldn’t be an aesthetic tyranny. Architecture is not a product like a TV – it’s a way of working.”