Ed discussed with the AIA some of the finer points of navigating economic lows.
AIA: What lessons have you learned from the Great Recession and other, smaller downturns?
Ed Shriver: As for lessons learned, I’ll start with my rule no. 1: The talking heads don’t know more than you do. I remember – a month or two before Lehman Brothers collapsed – thinking, “I don’t understand why the economy is doing so well.” Everyone was saying, “Don’t worry, it’s not a bubble.” Two weeks later, boom. At that point, I said, “You know what? I’m not an idiot, and those people aren’t as smart as they think they are.” Pay attention to what you’re seeing, and trust your gut.
AIA: What steps have you taken in the past to survive during a downturn?
Shriver: The first thing we did during the Great Recession was to call our landlord. We knew he was in the same boat as the rest of us, and an empty office space is much less valuable than a tenant paying 75% of the rent. So I negotiated a discounted rate, which was in place until the recession ended. He was open to the idea, and we were able to show our employees a commitment to exploring outside-the-box options before considering layoffs. Hey, the worst thing he could do was say no.
We also cut all salaries, including the partners, by 20%. But we also cut our work week from five days to four. Essentially, our staff was getting paid for the same effort; they were just getting less pay. And the partners still worked five days, even with the trimmed salaries. I think that meant a lot. You have to take care of your people first; that’s been our approach from the beginning.
AIA: What signals do you watch for to indicate that your workload may be slowing in the future?
Shriver: The ABI is down, and has been for a while now. I’m seeing projects that start and then stop suddenly, which is unusual. And I’ve seen, not with our firm but elsewhere, a rise in legal claims. Lawyers are out talking to developers and builders, and they’re getting more aggressive. I’m starting to see and hear about claims that never would have been filed 3 years ago. People are starting to look for extra money; architects have insurance, so they could be thinking, “Let’s see if we can get a little of that.”
Excerpt from AIA article published November 2019.
