This time last year, workloads had rebounded sharply following the pandemic and a significant shortage of staff due to Brexit had meant practices often found it far harder to recruit than they expected. Although, at the time, salaries had only risen by a small amount we wrote:
“With the pressures on salaries only rising, if workloads continue to grow and the workforce continues to shrink, we anticipate this year’s results will be just the start of a meaningful increase in architectural income.”
At the start of 2022, the trend of increasing workloads and staff levels looked to be continuing until the Russian invasion of Ukraine sadly changed everything. Inflation has since risen to over 11%, the cost of borrowing has leapt as interest rates increased and according to the RIBA Future Trends Survey, future workloads are now at the lowest level since the pandemic. With market conditions looking so poor, it has however been surprising how busy many practices have been this year and mid-career architects, especially, have still been very much in demand. In terms of the number of jobs we have received within 9B, this year has only been 10% down on 2021 which was a record year. That said, the last couple of months since the mini budget have seen a marked decline and it feels like the salary rises during 2022 may become a peak as we head into another recession.
The cost-of-living crisis and ensuing recession has caused employers significant difficulties in recruiting and appropriately rewarding the best staff yet still staying profitable as fees have often been cut and other business costs have dramatically risen. It therefore appears that in order to balance the books, it has been the directors who have had to make the most sacrifices.
We were delighted to receive over 2,000 responses to our salary survey which showed salaries of architectural staff in practice increased by an average of 6%. This figure consisted of wide variations across the industry which saw the pay for new graduates entering practice for the first time jump by over 13%, whereas salaries for directors within architectural practices only increased by 1.4%. Recent Part 3s also saw a significant increase of over 8% and the benefit of gaining your Part 3 is now at the highest level since we started conducting the surveys 7 years ago. Recently qualified architects are now being paid around £5,550 more than Part 2s with the same number of years’ experience in practice. In 2021 this figure was just £4,250.
Bonuses, having been cut in the pandemic, have now recovered and on average, just under 45% of architectural staff receive a bonus. There is however still a surprising difference between the genders with around 50% of male staff receiving a bonus compared to just 39% for women.
As well as architectural staff, office managers have also seen good salary increases and are up by 7.1% to around £46,500.
Although the salary rises we have witnessed over the last year have been significant, compared to inflation of 11.1%, in real terms, architectural salaries are still decreasing. As much as most employers would like to increase salaries further, this is never going to be possible unless fees rise. The last couple of years appear to have been very busy for architectural practices but sadly often not hugely profitable and perhaps the pandemic knocked the confidence of the profession to maintain or increase fees.
Parag Prasad Managing Director and Head Coach at The Business Growth says:
“With the cost-of-living crisis and high inflation taking its toll practices must double down on the basics: avoiding discounting and over-servicing; proactive marketing; and working to clear 90-day action plans. This year I was Creative Director at RIBA’s Guerrilla Tactics conference along with Amos Goldreich and we chose the theme Wellbeing in Practice. More than ever, I see the ability to manage time, stress and mindset as the keys to success for leaders in the architecture industry.”
Stephen O’Reilly from Loud Marketing ads: “We work with a range of architectural practices. The most successful and inspiring are those who believe, as Parag puts it, in proactive marketing. The starting point is a marketing strategy and plan, so you know what you’re doing and why. First impressions really do matter, especially when fee levels are under pressure, and so a decent visual identity and website are critical. Then it’s about focusing on the audiences that matter, using different marketing channels and activities to reach them, making an impact and differentiating your practice over time. This all helps to generate new leads, retain existing clients and with the recruitment and retention of talent.”
As we move into 2023, I fear firms that don’t have a strong pipeline of work, will start undercutting competitors and for those who are not subsequently winning new projects, redundancies will become inevitable. Within 9B, we have already seen an increase in applications from well qualified architects with experience at AJ100 studios. The candidate market of the last couple of years appears to be waning and I expect there will be far more competition for roles next year which will likely put a handbrake on salary rises.
The one consistency we see every year from the survey results is the increase in salaries achieved by architectural staff working for developers, contractors or client side. With the cost-of-living crisis biting, a particularly large percentage of candidates we speak to are looking to make this move away from traditional practice. Unfortunately, the number of vacancies within this sector is far smaller and therefore competition is significantly higher. It has also been reported by housing developers that since the sudden increase in interest rates following the mini-Budget, buyer confidence has been impacted slowing in demand.
The other popular move has been into the public sector which, although often has slightly lower salaries, does tend to offer a better work/life balance and pensions. With the impending government cuts, however, this option may be become more limited.
The one benefit to come from the pandemic has been the increased flexibility of studios and the work/life balance has been a strong influence on the decision for many when accepting a new role. The last part of our report looks at the additional benefits offered by practices and how many are trying to rebuild the studio culture following lockdowns whilst still maintaining some flexibility.
To read the full report, please click here.