In what is being hailed as an Australian first for the industry, BRW has reported that Hayball has become the first employee owned architecture firm.
The employee share scheme for the Melbourne based architecture firm promises to deliver 20 to 25 per cent employee ownership over the next 10 years. It is designed to give staff a “piece of the action” without the legal responsibilities of being a director.
“By sharing ownership, you’re retaining and attracting talent and that leads to growth in the business,” Hayball managing director Tom Jordan said. “With better people, you generate work. If those key people are then connected to the financial performance of the business, they’re much more in a mindset of business development.”
Jordan also anticipates the value of the share scheme in contributing to the company’s corporate brand identity.
“This will strengthen the breadth of Hayball as a brand, rather than our identity being bound to any particular individuals,” he said.
Shared ownership is more prevalent within engineering firms including Arup, MWH Global, GHD and SKM and is a rarity in the architecture industry according to Jordan, who expects Hayball's shared plan to be in place by the end of the year.
In Arup’s case, founder Ove Arup and his partners decided to move to a trust ownership arrangement to instil stability for the firm and have it be directed by Arup people rather than outsiders who may buy into the firm.
In an overseas case study, HDR, a global architectural and engineering consultancy headquartered in the US, found an ESOP (Employee Stock Ownership Plan) improved recruitment and retention within the organisation.
“We have been able to use the ESOP culture to our advantage when it comes to successfully negotiating and integrating acquisitions,” said HDR chief financial officer Terry Cox. “Most firms in the industry are private and closely held, so the process of managing who gets ownership and how much is difficult. The ESOP allows new employees to see the huge opportunities of ownership, especially when people can relate their performance to firm value.”
In the UK, Make Architects is 100 per cent employee owned with each staff member sharing in the company’s profits. Make also uses this model to attract and retain staff while offering an “egalitarian working environment” where everyone can have a sense of ownership.
With many architectural firms still owned by their founders, an employee-shared ownership also offers a flexible, often tax-saving “exit strategy” for founders approaching retirement age.
Like Hayball, which will require staff leaving the company to sell back their shares, departing founders or senior management can do the same in a bid to continue engaging employee interest after their departure.
Rather than selling to one or two owners, potentially leaving those who were not selected feeling de-motivated, shared ownership distributes credit and accountability to everyone for the firm's ongoing success.