Being the Director of an Architecture Firm. Sipping cocktails on the beach. Owning a boat. Attending extravagant opening nights as a VIP.
Sound like you? Probably not. We all know that the glamour of Architecture is shinier than the reality. But you can still do quite well as a Director.
(Yes that’s me captaining that big 50ft yacht! But I don’t own it. I just rent it when I feel adventurous and miss the wind and waves)
As a business coach and fractional practice manager of various Architecture firms in East Melbourne, I have the privilege of seeing behind the financial curtain of multiple businesses at once, and what I’ve learned is that every firm is so dramatically different that there truly is no single answer.
But let’s keep this blog post short today:
- A base salary of $200,000 is common for a director. Rarely is it higher.
- In good years, dividends can double this up to $400,000.
- I’ve never seen a director earn more than $500,000 in a year – but that may be because directors of firms that large don’t use external business consultants – instead favouring permanent CFO and COO hires to their board.
The interesting thing I’ve noticed is that the correlation between firm size and director salary isn’t quite a linear experience. There’s something I call the ‘growth hump’ in Architecture firms – the moment when a firm is too large for the Director to do any design, but not large enough to make money.
When a firm is small, the director physically does the design work – and that means that they can take a double salary – one salary as the worker, and another salary as the business owner. This essentially inflates their earnings.
But around the 6-12 staff size, directors need to dedicate all of their time to the business and staff management. And so they fall back on solely their salary as a director – a major pay cut!
If they can break through to above 15 staff, they may find that their dividends kick in and that the rewards are greater than any salary they would have received as a worker.
Is it all Success?
Purely from personal experience, I can say that most Architecture firms can’t break through the ceiling, and the director eventually falls back into doing the design work. That’s not necessarily a failure. It’s often because the director doesn’t want to work 50 hour weeks as a CEO – and that’s totally ok. Business growth without a reason can be its own form of punishment.
After all, success and business design are as personal as designing a house for a client. Everybody has a different brief.
Slow Years Break the Mould
One thing to bear in mind is that we always remember the peaks, and always forget the plateaus. I think it’s just how humans are built.
One particular Architecture director I work with constantly remembers their strongest months and thinks it’s the norm. And I’m constantly reminding them that 4 months a year they don’t have enough cash to pay their own salary!
So while the $400,000 may seem quite impressive to any Architect (especially given many senior Architects are only on $100,000 in Melbourne), it’s critical to remember that when averaged out to accommodate leaner years, this salary comes back down to a substantially lower number.
Is it worth it being a Director of Architecture?
That’s a tough question. After all – I left a very successful career as an Award-winning design Architect to become a healthcare CEO, and eventually a full-time business coach and fractional practice manager.
I would suggest that any director needs to sit down 1-on-1 with a trusted person and actually come up with their ‘raison d’être’ – their reason for being. Every Architecture director I work with pines after the dream of just doing design work – and not a single one of them gets passionate about running a business, warts and all.
Being an Architecture firm director can be very rewarding – but sometimes the best business size is in that smaller 3-10 person range, where you can still enjoy doing the work – especially if you’re willing to get help in running the business.
