Extra-Large Firms

Three mega-offices, with their distinct histories, reveal strategies for addressing problems looming for the profession.

By Laura Raskin

Think of the conditions in the world today: aging infrastructure and an urgent need for housing across the globe; a warming planet and exponential natural disasters that leave communities to pick up the pieces; a construction industry that, according to a 2017 McKinsey Global Institute report, has evolved at a glacial pace, despite being one of the largest economic sectors. Rapidly ­changing technology. Terrorism. And, overall, a globalizing economy. Because of their size and reach, extra-large architecture firms—for the sake of this investigation, let’s say those with 1,000 employees or more—are perhaps best equipped to tackle these daunting challenges. As Lance K. Josal, CEO of CallisonRTKL, wrote for a Design Intelli­gence blog post in 2017, “Who better to deal with these topics than a professional trained in life-safety, resiliency, and design on a global scale?”

These themes were repeated in recent interviews with CEOs at three of the largest U.S. firms: Perkins + Will (P+W) continues to acquire other firms (three in the last 12 months) to provide a one-stop design shop, and the company runs its own rigorous research arm; Gensler, founded in 1965 and credited with advancing the practice of architecturally oriented interior design, is building bigger and bigger, having completed the Shanghai Tower in 2017, China’s tallest building; and 100-year-old employee-owned HDR continues to saturate such seemingly disparate markets as workplace and health care, while getting design recognition along the way.

To continue to be successful, practitioners at these firms say they must embrace diversity in their workforce as well as their work product; act locally, regionally, and globally; and offer “full service,” from graphic design to urban planning. There is pressure to complete projects in a range of scales and markets with speed and agility, and at a low cost—while simultaneously producing quality design that can compete with a boutique firm’s specialized aesthetic.

Growth and Globalization

“Size is never something we think about,” says Phil Harrison, CEO of P+W. “It’s a result, not a strategic goal.” Instead, a desire to work for “best-in-class clients” in a globally integrated marketplace will continue to motivate the firm’s expansion plans. The firm’s test for adding an office or acquiring another firm is: Can they serve their clients better by being more geographically diversified or offering more services? If they are expanding, is there a good pool of talent in that area? Typically, the firm wants its offices in metropolitan areas with more than 5 million people.

In January, P+W acquired the 170-person Copenhagen-based firm Schmidt Hammer Lassen Architects—a move inspired by a post-Brexit world and the need to have mainland European offices in addition to its London one, as well as the desire to tap into Scandinavia’s design talent. But, driven by a different strategy, P+W merged last October with Denver’s Sink Combs Dethlefs in order to expand its wellness, sports, and recreation practice—a now “booming” market, according to a 2017 report, as the wellness industry is “reaching beyond its (narrowing) association with wealthy elites.”

HDR CEO Doug Wignall has seen his firm’s growth skyrocket abroad in the last decade. About six years ago, HDR decided to diversify outside the U.S., using a similar formula to P+W’s: a new office should be located in a country with robust GDP growth, a strong banking system, and a history of ethical means of doing business. “The world then becomes very small,” says Wignall. About 60 percent of HDR’s growth has been achieved through acquisition. The firm has eight offices in Germany alone, six of them acquired by buying TMK Architekten in 2013. HDR has also established outposts in Australia and Canada. Six years ago, 3 percent of HDR staff and 5 percent of the work was overseas; now that ratio is 35 percent and 40 percent.

But when is big big enough—or too big? “There is a point where you move into as many markets as deeply as you can. We’re not there yet,” says Wignall. “We are starting to compete in building types that aren’t institutionally based, including retail, corporate, hospitality, aviation, etcetera. But to do that, we’ll have to acquire that expertise.”

Gensler, the global architecture and planning firm with 45 offices in 14 countries, was founded by M. Arthur Gensler, Jr. “by happenstance . . . with no grand plan,” he says, recalling the time Alcoa asked him, then 28 years old, to do its interiors while he was at Wurster Bernardi Emmons. (At 83, he still goes into the San Francisco office every day.) Gensler has held the title of largest U.S. architecture firm for six years, with more than $1.19 billion in revenue in 2017. The practice works in roughly 30 sectors, from aviation to brand design. It will not venture into design-build or acquisitions, however, says Gensler. “We’re a private company, and we don’t buy firms.” Firm co-CEO Diane Hoskins echoes P+W’s Harrison when she says, “We’ve never had a goal of being a certain size.” As the world continues to urbanize, “clients and communities want us to help them think about their future.” Gensler has started an innovation-and-research consultancy, and its statisticians, data analysts, and other non-architect scholars are leading its focus, says Hoskins, on everything from the future of education to how fuel cells can be deployed in buildings as a sustainability measure. The self-funded program is not paid for by clients, except in certain instances.

Agility Matters

All three CEOs say that, aside from wanting to penetrate new markets, the growth of their firms is a result of a desire to be local and embedded in the communities and cultures where their clients are. Says P+W’s Harrison, “We are striving to be the largest small firm possible. We want to have a culture, a decision-making structure, and a leadership distribution that feels like a small firm, so you don’t have to go up a big, bureaucratic chain of command and can take action right away.” As he puts it, if you go to a meeting with 200 people, it’s not a meeting. Technological tools and social networks within the firm provide the research on certain subjects, such as health care or resiliency, which is dispersed to new projects that come up. For each design endeavor, a custom team is gathered.

Collecting Data

Like Gensler, HDR is investing heavily in predictive analysis. “We’re finally getting to the point where there’s enough data available that you can organize and manipulate it and make predictions,” says Wignall. “We’re hearing all about that now with Facebook. You can do the same thing with building data.” With the erosion of the classic design and construction-document model, and the commoditization of the “back end” of construction, he believes HDR should focus on what architects do best–design–and then augment that with technology. Through parametric modeling, HDR’s data analysts attempt to predict how a building’s design will affect their client’s outcomes, operationally and financially. “It’s a really compelling story for the owner, and it’s making our design process better and better.” According to Wignall, the resulting design is enhanced because architects can spend more time on aesthetics. The fees for this service are included as a “base offering,” he adds, with exceptions for extensive analysis.

Diversity, Staff Equity, and #MeToo

When P+W turned 75 in 2010, one of its 25-year goals was to achieve global diversity, which the firm defined in terms of gender, race, ethnicity, geography, and skill sets. “We thought, We’re going to move the needle slowly,” says Harrison, “but in the last three years, we’ve realized it’s an immediate, urgent goal.” P+W has also been implementing procedures to ensure salary equity and is planning to publish the results soon.

Wignall reports that employee-owned HDR’s most recent five-year plan is focused on staff development rather than on finance goals. He’s aware that young designers, who have greater technological skills, have less patience for the plateaus of traditional career development and have far less allegiance to any single employer. The business, tech, and hospitality worlds thrive on workers who see themselves as free agents and who can practice their craft from anywhere, including their apartments. To counter this, Wignall says HDR allows staff to do independent research, and underwrites employees’ involvement in various professional organizations.

At Gensler, the staff is 54 percent women, and the firm has always had women in leadership roles, says Hoskins. (Given Gensler’s history and practice in interior ­design—a field with 66 percent women, according to a 2017 study by Interior Design magazine—that statistic isn’t so surprising.) Hoskins, who is African American, says that diversity at Gensler is almost a matter of course.

In the male-dominated worlds of architecture and construction, and an atmosphere that has historically glorified late nights in studios and hero-worship of its mostly white, male auteurs, it is not surprising that #MeToo has begun to crack open the issue of sexual harassment in the profession. Manhattan-based employment attorney Mark Ottinger says that two of the strongest ways in which firms can protect staff and send a no-tolerance message is by doing away with confidentiality agreements in harassment settlements and ending arbitration agreements, which many employees often sign when hired without realizing it. These require disputes with the firm to take place behind closed doors. Neither P+W nor HDR make their employees sign either kind of agreement. Gensler’s Hoskins says only, “Every issue, person, and situation is unique, and everyone deserves to be treated fairly. That’s the bottom-line view—fairness.”

Costs and Value

Firms are seeing rapid change in almost every aspect of practice—except in fees, according to P+W’s Harrison. “Fees change slowly, and the basic methodologies that we use to come up with fees change slowly,” he says. “A lot is still based on construction cost, square footage, time, and materials of actual effort.”

From Wignall’s perspective, fee structures are changing more quickly. Instead of project fees being based on a percentage of construction costs, he says that the majority of the firm’s work is billed on an alternative delivery model—a term for projects that don’t fall under the traditional design-bid-build rubric, including integrated project delivery (IPD), public-private partnerships (P3), and multiple variations on design-build work.

Gensler’s Hoskins agrees, adding that the firm typically follows a value-based compensation model, where a base fee is charged, and compensation is added as design teams hit certain building-performance targets.

Architects as Thought Leaders

If architects are going take the lead in addressing the challenges of our time—and are going to avoid being marginalized by Silicon Valley start-ups that are pushing into the design and construction sector—“we have to get out of the office and see what is happening in our cities,” says Hoskins. She notes that climate change and the fact that buildings contribute such a big percentage of the CO₂ on the planet need to be addressed: “At Gensler, we have a strategy to ensure every project is moving towards a carbon-neutral model.” Architects must also help communities build contextual, smart cities—one reason why Hoskins sees Gensler’s 45 individual offices as so important. In Los Angeles, for example, where homelessness rose 23 percent from 2016 to 2017, the local office designed a prefab permanent supportive-housing prototype that it hopes to help implement.

Harrison says that it’s time for architecture to be aspirational and broaden its mission in an increasingly urbanized world. Designers need to create change—to have an impact on “tertiary” sectors: health, quality of life, education, social equity, mobility. He adds that architects need to assume a much broader role as designers, taking a page from their polymath Renaissance forebears. If these firms continue on the paths they are pursuing now, there is hope for a new golden age.

Laura Raskin, a former editor at RECORD based in Brooklyn, New York, writes about architecture.

GENSLER
San Francisco + Other Locations
Founded in 1965
5,500+ Employees

HDR
Omaha, Nebraska + Other Locations
Founded in 1917
9,600+ Employees

PERKINS + WILL
Chicago + Other Locations
Founded in 1935
2,200 Employees