President and senior principal of ICON Architecture (Boston, MA), a women-owned, SOMBDA certified firm that’s staffed over 50 percent by women.
By Liisa Andreassen
Ludwig focuses on sustainable urban projects that create new paradigms for city living, and range from transit-oriented development to innovative adaptive reuse, and from low-rise to high-rise construction. She has contributed to the design and construction of more than 15,000 housing units throughout New England. Her projects have been case studies for nationally distributed books on sustainable housing, published by the ULI, Harvard University Press, and Global Green, and honored by multiple national awards.
“When staff can tell us succinctly what they want to do, we make our best efforts to keep them engaged and help them move forward,” Ludwig says. “This could mean pulling them onto another team where they can learn a desired skill, or sending them out for training for a specific topic, or keeping them first in line for the next project type that they want to explore. Our senior staff are very good at helping engaged junior staff grow into new positions by letting them shadow the work that they do.”
A conversation with Nancy Ludwig.
The Zweig Letter: How far into the future are you able to reliably predict your workload and cashflow?
Nancy Ludwig: At ICON, the “projections” are an important tool to help us understand both workload/staffing as well as cashflow. We monitor every project, update fee spent versus overall fee, and project fee to be expended over our contract time period. Along with our controller, I meet with each project manager to forecast their project needs over the forthcoming year as best we can. We then review the projections monthly with our business management team, with everyone in the room, so that all managers understand overall firm project needs and all staff assignments. Managers often share staff and it’s important for them to understand how much time of a staff member that they can access. We are organized in three focus areas of the practice, so each practice principal is also involved in the process. This is a critical part of our business planning, and overall communication. We have perfected our “homegrown” spreadsheet, and it has proven fairly accurate over the years. It also allows us to see if principals and associate principals are meeting their business development targets.
TZL: How much time do you spend working “in the business” rather than “on the business?”
NL: I am blessed to be able to do project work – and can often be found sketching early design ideas and approaches to projects. I am lucky to have a trusted group of project managers who work with me, and we understand each other’s working styles. While I don’t spend time drawing on the computer (that would not be cost effective!), I am able to review design progress with staff on “screen,” and adapt design details through our design software programs. I also enjoy meeting with clients and city officials in the permitting of our work. I am project billable more than 60 percent of my time.
That said, I do enjoy the business as well – the numbers are direct and clear cut, while designing buildings is very subjective. I also enjoy developing concepts for existing and new clients, helping them bring ideas into vision as part of our business development strategy.
TZL: Are you using the R&D tax credit? If so, how is it working for your firm? If not, why not?
NL: We are absolutely using the R&D tax credit! Our accounting firm has made this an integral part of our firm finances. Our firm has a long history of innovation with sustainable building technologies – the R&D tax credit seems to have been put in place for just our kind of efforts.
TZL: How are you balancing investment in the next generation – which is at an all-time high – with rewards for tenured staff? This has always been a challenge, but seems heightened as investments in development have increased.
NL: We find that people across all ages need to feel engaged, and will self-select where they want to focus their energies. If staff members want to take courses for higher certifications, establish organizations, or travel to conferences, we encourage them and generally pay for the events. We do extensive in-house training, often led by staff themselves, helping them to grow in their presentation skills. Our younger staff appreciate this level of engagement. We do our best to make sure our tenured staff work on the kinds of projects that motivate them, and give them responsibility to focus their growth. We have been able to reward all staff with generous bonuses and retirement account contributions over the last couple of years.
TZL: What novel approaches are you bringing to recruitment, and how are your brand and differentiators performing in the talent wars?
NL: Over the years, we’ve employed recruiters, LinkedIn, ads on industry websites, and attended job fairs at local colleges, etc. But we have also attended conferences, participated in events that draw students, and lectured at colleges and universities to find talent. We are lucky to have great architecture programs in Boston, and taking part in their intern or cooperative education programs has netted us many grads throughout the years. Our brand is grounded in deep caring about the environment and housing, and that tends to draw people to our practice. “Fruit Tuesdays/Thursdays,” “Bagel Fridays,” and many teaching, training, and group activities throughout the year keep our staff very engaged.
TZL: When you identify a part of your business that is not pulling its weight in terms of profitability or alignment with the firm’s mission, what steps do you take, and what’s the timeline, to address the issue while minimizing impacts to the rest of the company?
NL: We’ve established performance metrics for each principal, and their practice areas. These metrics are evaluated on a quarterly basis. If the principal cannot meet basic billability requirements and bring in enough work to support the staff in that practice area, we act immediately to reduce costs for that practice. Over the years, this has included reducing salary for that principal, reassigning staff, and/or reassigning work to shore up the practice area.
TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid?
NL: ICON named our next generation of leaders almost two years ago, and these six new shareholders are already in their second year of stock buy-in. When I became the managing shareholder of ICON more than 10 years ago, I changed the mandatory “sell” year for our three current shareholders to age 62 – so that we would be working to help earn profits and clients to assure a smooth transition. We have laid out a five-year transition timeframe. We have quarterly retreats with the new shareholders, exploring various topics. We are currently engaged in an eight-week management training course, taught by an outside consultant, to build communication and management skills within this group. We have established business development targets for each new shareholder and evaluate them on an annual basis as part of our annual review. We are working to help everyone understand the roles they will grow into over time.
I believe the greatest pitfall to avoid is ignoring performance issues, just because they are new owners. We have been clear and concise about expectations, and each new owner understands performance is tied to financial success.
TZL: Is change management a topic regularly addressed by the leadership at your firm? If so, elaborate.
NL: Our firm has been around for 40 years, and we are now evolving our third-generation of owners. So, change has been a discussion for at least the past 15 years. We refer to my generation as ICON 2.0 and our rising shareholders as ICON 3.0. The firm has evolved from an urban design and planning practice, to a multi-family architecture practice, and now have sectors focused on learning environments and renewing buildings. Change is always in the air here.
TZL: How do you handle a long-term principal who is resting on his or her laurels? What effect does a low-performing, entitled principal or department head have on firm morale?
NL: Everyone is different, and we have worked with senior principals to step back from the firm with dignity. Having established performance metrics, that are clear to all, we have allowed senior principals to reduce their time in the office to meet the workload that they bring in.
TZL: How often do you valuate your firm and what key metrics do you use in the process? Do you valuate using in-house staff or is it outsourced?
NL: We work with an outside accounting firm to value the firm each year. This is a process that we set up 10 years ago and consists of averaging value based upon five different and commonly accepted valuation strategies. The share value is derived from this, and allows us to buy/sell shares as we transition the firm to a new generation of leaders.
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?
NL: ICON has named a principal in his 30s, although he has been with ICON before he even graduated from architecture school. Principals achieve that position due to many factors – but in this case, he was an integral link to several important, repeat clients. And, of course, he is meeting all his targets!
TZL: What happens to the firm if you leave tomorrow?
NL: My job right now is to step back and let the next generation lead forward. While I hope they would miss me, I’m positive that they would carry on developing this practice. I fully expect the firm to change and evolve even before I am gone. The new generation needs to follow its passion.
TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?
NL: My partner and I sit with each and every employee for an annual review. At the review, we ask staff how we can help them succeed – noting that we cannot script their plan, they need to. When staff can tell us succinctly what they want to do, we make our best efforts to keep them engaged and help them move forward. This could mean pulling them onto another team where they can learn a desired skill, or sending them out for training for a specific topic, or keeping them first in line for the next project type that they want to explore. Our senior staff are very good at helping engaged junior staff grow into new positions by letting them shadow the work that they do.
TZL: Diversity and inclusion is lacking. What steps are you taking to address the issue?
NL: ICON is a women-owned firm and is SOMBDA certified. Our staff is over 50 percent women, and we actively seek to diversify our staff, recruiting minorities and persons of color at a percentage similar to that of the profession. We often take on interns, work with them during their training, and stay in contact as they finish their schooling with the intent that we want them to return to ICON as they start their professional career. We encourage all staff to get involved with great organizations outside the office to give back – and we financially support these efforts. We also pay for our staff to get registered as architects, and encourage study groups within the office to support our staff as they make their way through a multi-year registration process.