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EMPOWERING PEOPLE IN ARCHITECTURAL DESIGN – THE RE-ENGINEERING OF AN ARCHITECTURAL DESIGN PRACTICE AS A FRANCHISE BUSINESS
PETER ALLYN COOKE
Dissertation submitted to Oxford Brookes University, in partial fulfillment of the requirements of the degree
MASTER OF BUSINESS ADMINISTRATION
Supervisor: Dr Louise van Scheers
September 2005
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‘The manager and his immediate assistants have to know where
they are going and have to make certain each part of the
organization knows and that the efforts of each individual segment
of the organization are devoted to forwarding the same general
purpose.
‘Without that coordination action, the different elements of the
organization go into a tangle that results, not in the forwarding of
the general purpose, but into confusion and frayed temper and
nerves.’
L. Ron Hubbard
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ACKNOWLEDGEMENTS
I would like to thank the PC Architectural Design team for holding the fort, answering the phones and backing me up during the many stress-filled hours. To Lee-Ann, Rudolf, Chantelle, and Suzette for pushing me to continue and for believing I could do it, even when I did not, and for refusing to let me throw in the towel. To my large network of friends, and relatives who understood what I was up to, and why I suddenly became “Mr. Anti-Social” . To Dr. Louise van Scheers, my supervisor, thank you for accepting me as a student at the 11th Hour, despite your already hectic schedule and the completely unrealistic time constraints. Thank you for always responding at the speed of light, for being clear and direct, and for handling my panic with a statement I will never forget; “Relax, this is not Rocket Science – it’s just a Masters.”
Finally, I thank my wonderfully supportive wife, Nirvana, and understanding daughter Serenity, for your continuous support, and back-up, and for accommodating me at my most stressed.
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ABSTRACT Throughout history architects have been responsible for conceiving,
designing and defining entire cultures, for organizing and planning
entire cities and provinces, and for producing structures that have stood
as a strong legacy for thousands of years. Why is it then that architects
seem incapable of utilising that same vision and ability to conceive of,
design, develop, and organise robust and dynamic organisations, that
are stable, and built to last as long as the physical structures they are
creating?
Compound this question with the strategic question – is it possible to
not only build such a business, but to do so using a franchise type
model? These consolidated questions comprise the research puzzle
that this study has been tasked with resolving.
Through the use of qualitative research methods, and data analysis
techniques, this research answers these questions, with startling and
insightful results from the empirical research, which not only illustrate
that it is possible to build a large stable architectural design practice,
but make recommendations as to whether or not the franchise model is
the right way to go about this, and why.
The research, which is a case study of an Architectural Design practice
in Gauteng, presents its findings and results, and illustrates that there is
a cohesive relationship between the entity type engaged for an
architectural practice, and the structure, culture, size and strategy of the
business, as well as the practice’s attitudes, and assignments of
importances to such pressing issues as Black Economic Empowerment
and the development of skills within the industry.
PC Architectural Design is also researched, using qualitative
techniques, and by way of interviews and questionnaires to establish
the strategic position, stability and state of health of the business. The
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findings here provide a valuable insight into the stage of growth that the
practice is in, as well as the staff morale and sentiment, and the
principals’ strategic plans and ideas.
These internal and external results and their findings are evaluated
against the backdrop of the literature review, to allow the researcher to
make recommendations to the practice on their future strategy, which
answers all of their questions, and in so doing, resolves this research
puzzle.
The research question posed was to determine if an architectural
design practice could be re-engineered to operate as a franchise
business. This posed the secondary question of asking if there would
be any material benefit in doing this. Finally, PC Architectural Design
operates in South Africa and is aware that government has adopted
policy such as Black Economic Empowerment, and Skills Development.
The question of how to integrate these policies into this strategic
research was added to the mix – just for good measure.
This research has taken all of this into account and has included and
incorporated these factors into the recommendations so that the
questions asked are not only answered in an academic context, but
have been incorporated in terms of their application in the practical
business recommendations made herein.
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TABLE OF CONTENTS ACKNOWLEDGEMENTS iii
ABSTRACT iv
TABLE OF CONTENTS vi
LIST OF FIGURES ix
LIST OF TABLES ix
CHAPTER 1 INTRODUCTION 1
1.1 BACKGROUND 1
1.2 THE RESEARCH PROBLEM 3
1.3 RESEARCH AIMS AND OBJECTIVES 4
1.4 AREAS OF LITERATURE REVIEW 6
1.5 RESEARCH METHODOLOGY AND KEY CONCEPTS 6
1.6 RELEVANCE OF THE STUDY TO PC ARCHITECTURAL DESIGN
AND THE ARCHITECTURAL INDUSTRY 7
1.7 LIMITATIONS AND GENERALISABILITY OF THE STUDY 7
1.8 DISSERTATION OERVIEW 8
CHAPTER 2 LITERATURE REVIEW 9
2.1 INTRODUCTION 9
2.2 ORGANISATION STRUCTURE, CULTURE, AND COMPENSATION
RELATED TO ARCHITECTURAL PRACTICE MANAGEMENT 9
2.2.1 ORGANISATION STRUCTURE 9
2.2.2 THE CULTURE OF ORGANISATIONS 15
2.2.3 COMPENSATION SYSTEMS 17
2.3 FRANCHISING AND SIMILAR STRUCTURES 20
2.4 STRATEGIC MANAGEMENT AND BUSINESS PROCESS
RE-ENGINEERING 23
2.4.1 OPERATIONS LEVEL STRATEGY 24
2.5 GOVERNMENT POLICY REGARDING BLACK ECONOMIC
EMPOWERMENT AND SKILLS DEVELOPMENT 27
2.5.1 BROAD-BASED BLACK ECONOMIC EMPOWERMENT ACT 27
2.5.2 SKILLS DEVELOPMENT ACT 28
2.5.3 CETA SECTOR SKILLS PLAN 29
2.6 SUMMARY 30
CHAPTER 3 RESEARCH METHODOLOGY 32
3.1 INTRODUCTION 32
3.2 METHODOLOGICAL PHILOSOPHY 32
3.2.1 POSITIVIST vs INTERPRETIVIST 33
3.2.2 ONTOLOGY 34
3.2.3 EPISTEMOLOGY 35
3.3 RESEARCH DESIGN AND STRATEGY 35
3.4 POPULATIONS AND SAMPLING 37
3.4.1 POPULATIONS 37
3.4.2 SAMPLING 38
3.4.2.1 SAMPLING METHODS 38
3.5 SAMPLING METHODS USED IN THIS RESEARCH 40
3.6 DATA COLLECTION METHODS 41
3.6.1 VALIDITY AND RELIABILITY 42
3.7 QUESTIONNAIRE DESIGN 43
3.8 SUMMARY 44
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CHAPTER 4 RESULTS AND FINDINGS 46
4.1 INTRODUCTION 46
4.2 RESULTS AND ANALYSIS 46
4.2.1 POPULATION ONE - ARCHITECTS 46
4.2.1.1 ARCHITECTURAL RESPONDENT ATTRIBUTES 47
4.2.1.2 ORGANISATIONAL STRUCTURES AND CULTURES 51
4.2.1.2.1 The structures and cultures of Sole Proprietor and partnership
based Architectural Practices 51
4.2.1.2.2 The structures and cultures of Close Corporation
based Architectural Practices 52
4.2.1.2.3 The structures and cultures of Private Company
based Architectural Practices 53
4.2.1.3 BEE POSITIONS AND STRATEGIES 54
4.2.1.3.1 The BEE position of Sole Proprietors and Partnerships
in Architecture 54
4.2.1.3.2 The BEE position of Close Corporations in Architecture 54
4.2.1.3.3 The BEE position of Private Companies in Architecture 55
4.2.1.4 ARCHITECTURAL INDUSTRY SKILLS ASSESSMENT 55
4.2.1.5 STRATEGIC POSITION AND THE CHANGING INDUSTRY 56
4.2.1.5.1 The strategic position and nature of change in the industry as
perceived by Sole Proprietors and Partnerships in Architecture 56
4.2.1.5.2 The strategic position and nature of change in the industry as
perceived by Close Corporations in Architecture 57
4.2.1.5.3 The strategic position and nature of change in the industry as
perceived by Private Companies in Architecture 57
4.2.2 POPULATION TWO - PC ARCHITECTURAL DESIGN STAFF 58
4.2.2.1 PC ARCHITECTURAL DESIGN STAFF SURVEY RESULTS 59
4.2.3 POPULATION THREE - THE PRINCIPALS OF PC
ARCHITECTURAL DESIGN 61
4.2.3.1 INTERVIEW - GENERAL MANAGER-ADMINISTRATION 61
4.2.3.2 INTERVIEW - GENERAL MANAGER-OPERATIONS 63
4.2.3.3 INTERVIEW - GENERAL MANAGER (MANAGING MEMBER) 64
4.3 RESEARCH FINDINGS 66
4.3.1 STRUCTURE, CULTURE, AND STRATEGIC POSITION 66
4.3.2 THE RELEVANCE AND IMPACT OF BLACK ECONOMIC
EMPOWERMENT ON THE INDUSTRY AND PC
ARCHITECTURAL DESIGN 68
4.3.3 FRANCHISING AND PC ARCHITECTURAL DESIGN 69
4.4 THE RESEARCH PROBLEM ANSWERED 70
CHAPTER 5 DISCUSSION 72
5.1 INTRODUCTION 72
5.2 THE FINDINGS IN RELATION TO LITERATURE REVIEWED 72
5.2.1 ORGANISATION STRUCTURE, CULTURE, AND
COMPENSATION 72
5.2.2 FRANCHISING AND SIMILAR STRUCTURES 73
5.2.3 STRATEGIC MANAGEMENT AND BUSINESS PROCESS
RE-ENGINEERING 74
5.2.4 BROAD-BASED BLACK ECONOMIC EMPPOWERMENT 74
5.3 SIGNIFICANCE OF THE RESEARCH FOR THE INDUSTRY 75
5.4 RELEANCE OF FINDINGS TO THE FIELD OF KNOWLEDGE 76
5.5 CONCLUSION 76
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CHAPTER 6 RECOMMENDATIONS AND CONCLUSIONS 78
6.1 INTRODUCTION 78
6.2 RECOMMENDATIONS 78
6.2.1 ORGANISATION STRUCTURE AND STRATEGY 79
6.2.2 CORPORATE-LEVEL STRATEGY 80
6.2.3 BUSINESS-LEVEL STRATEGY 82
6.2.3.1 PC ARCHITECTURAL HOLDINGS 82
6.2.3.2 PC ARCHITECTURAL DESIGN 82
6.2.3.3 PC ARCHITECTURAL OPERATIONS COMPANY 83
6.2.3.4 PC ARCHITECTURAL AGENCIES 83
6.2.4 OPERATIONS-LEVEL STRATEGY 84
6.2.4.1 PC ARCHITECTURAL HOLDINGS 84
6.2.4.2 PC ARCHITECTURAL DESIGN 84
6.2.4.3 PC ARCHITECTURAL OPERATIONS COMPANY 85
6.2.4.4 PC ARCHITECTURAL AGENCIES 86
6.3 CLARIFICATION OF THE LIMITATIONS OF THE RESEARCH 87
6.4 RECOMMENDATIONS FOR FURTHER RESEARCH 87
6.5 CONCLUSION 88
REFERENCE LIST 89
BIBLIOGRAPHY 91
ANNEXURES
A ARCHITECT RESPONDENT ATTRIBUTES BY RESPONDENT 94
B ARCHITECT RESPONDENT DATA BY ENTITY TYPE 95
C ARCHITECTS SURVEY QUESTIONNAIRE COVER LETTER 96
D ARCHITECTS SURVEY QUESTIONNAIRE 97
E PC ARCHITECTURAL DESIGN STAFF SURVEY QUESTIONNAIRE 99
F PC ARCHITECTURAL STAFF SURVEY RESPONSES TABLE 101
G GUIDING YOUR FIRM THROUGH KEY DEVELOPMENT PHASES 102
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LIST OF FIGURES AND TABLES
FIGURES:
2.1 ENTREPRENEURIAL ORGANISATION STRUCTURE 10
2.2 FUNCTIONAL ORGANISATION STRUCTURE 12
2.3 LEVELS OF STRATEGY FORMULATION 23
2.4 DIAGRAMATIC COMPARISON BETWEEN TQM AND BPR 26
4.1 RESPONDENT ENTITY SEGMENTATION 47
4.2 NUMBER OF PRINCIPALS AND STAFF PER ENTITY TYPE 48
4.3 AVERAGE TURNOVER PER PERSON IN EACH ENTITY SEGMENT 49
4.4 AVERAGE EXPERIENCE PER PERSON IN ENTITY SEGMENT 50
4.5 PC ARCHITECTURAL DESIGN STAFF SURVEY RESPONSES 59
6.1 PROPOSED CORPORATE LEVEL STRUCTURE FOR PC ARCHITECTURAL
DESIGN 81
6.2 PROPOSED ORGANISATIONAL STRUCTURE FOR PC ARCHITECTURAL
DESIGN 85
TABLES:
1 ARCHITECT RESPONDENT ATTRIBUTES BY RESPONDENT TABLE 94
2 ARCHITECT RESPONDENT DATA BY ENTITY TYPE 95
3 PC ARCHITECTURAL STAFF SURVEY RESPONSES TABLE 101
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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND Organisation Structure is a natural component in business, which has
an integral role in that it ‘provides the mechanism for the
implementation of plans and the controlled usage of resources’
(Kakabadse, Ludlow, and Vinnicombe. 1987: 314). From an
organizational perspective, the residential architecture industry in South
Africa, whether considering small or medium size companies, is
essentially comprised of the same, largely generic, organizational
structure. This structure could be described as being a “Nuclear”
Structure, in which the Architect, or Partners (in a larger firm) form the
nucleus of the organization, with staff, professionals, and activities
forming a cluster, and rotating around and serving this nucleus. The
reason for this structure may be attributed to the fact that the
organisation is dependent on the architect, who feeds life into the
organization. He is the driving force, making all key decisions and then
delegating tasks to staff on a system, which varies from completely
random to more structured, based on each organizational or project-
specific situation. In the case of a partnership, the partners roles often
overlap, with the same functions being performed by each partner, with
different clients, often giving conflicting orders to personnel and
competing internally for attention and production from their shared
personnel resources.
The research will investigate qualitatively the impact on and of the
stakeholders in relation to the re-engineering of PC Architectural
Design, and based on the findings, to develop an expansion-oriented
strategic and organisational framework for the company, to enable it to
operate as a franchise business. Architectural Design firms could be
perceived as a project oriented business, in which income is derived
through independent projects. As projects come and go, this introduces
an element of instability into such a business as there is little guarantee
that the volume of projects can be maintained at a consistent level.
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In addition to this phenomenon, Architecture and Design fall into a
unique category of being a technical science while also falling within the
field of the arts. With these two functions, considered by many to be
highly specialized, a limiting factor in the growth potential of
Architectural Firms is this schizophrenic split in focus, combined with an
organizational structure too reliant on a central persona and thus too
limited in growth potential.
Kakabadse, et al.(1987) argue that the shape and pattern of
organisations are dependent on their size, and that organisation
structure defines the culture of the organisation. Relating this to the
growth limitations of the typical Architectural Design Practice, one can
reason that key factors in limiting the growth potential of the practice
include; the attitude toward a changing business climate, the reluctance
of principals to allow decentralized decision making, complacency, and
reluctance to eliminate inefficient staff. (Zweig, M. 2003)
PC Architectural Design, as a practice, has historically operated as
such an organisation, however, the principals, recognising these
limitations, and wishing to have the business re-engineered to
accommodate a franchise or agency type model, wish to investigate
these alternative methods of operation.
PC Architectural Design’s principals have recognized that a growing
void exists between the flexibility, focus and expandability of the
structures and strategies of traditional architectural design firms, and
the fast moving local market, which must incorporate the needs of
government, (by playing a role in Black Economic Empowerment) the
industry, (by lowering the barrier to entry into the industry for previously
disadvantaged individuals, thereby ensuring distribution of wealth in this
sector) the local community, (By being attentive to and providing
appropriate and cost-effective solutions to their architectural design
needs) and the employees of the organisation. (By creating a learning
organisation which accepts responsibility for its staffs well being)
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The problem and related sub-problems inherent in contemplating such
an organisational change shall be discussed in the following section.
1.2 THE RESEARCH PROBLEM Having outlined the limitations and inherent complications facing the
company given the nature of the organisation as it stands, the need for
re-engineering the business is apparent, however the method of doing
this in such a way as to capitalize on any current and future advantage
that the market presents, needs to be researched.
The research has to take all stakeholders and role players into
consideration in determining the best avenue and method of
organisational design and strategy implementation. These stakeholders
or role players would include internal stakeholders, namely the
principals, management and staff of the practice, external stakeholders,
namely the clients, and national government. External role players
would include current and potential competitors,
Thus, the primary research problem is to determine if the traditionally
nuclear or cluster type organization of an architectural design practice
can be re-engineered to create a strong and stable organization, which
will lend itself to an agency or franchising model, while not
compromising design quality, technical integrity, and commercial
viability for all stakeholders?
This research should take the following sub-problems into
consideration:
What are the internal and external forces that influence the
organisational structure, strategic focus, and limitations of an
Architectural Design Practice, and can these forces be
manipulated to allow for a new organisation structure.
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Determine the key needs of the internal and external
stakeholders, and assess these needs as to their relevance and
impact on change being effected within the organisation.
Research and test organisation structures, and operational policy
to determine the most suitable organisation structure for this
practice based on the key needs expressed by the stakeholders.
Discover the BEE position and strategy of other Architectural
Design practices, as well as their success in implementation of
their strategy, and the expected longevity of their BEE position,
and use this to develop and recommend a BEE strategy, which
would position the firm uniquely and be a key strategic
differentiator for the firm.
The aims and objectives of research work are key in guiding the
researcher and providing direction to the study. We will explore these in
the following section.
1.3 RESEARCH AIMS AND OBJECTIVES
With the research problem stated in the previous section, it is the
writers aim in conducting this research work to investigate qualitatively
the impact on and of the stakeholders in relation to the re-engineering
of PC Architectural Design, and based on the findings, to develop an
expansion-oriented strategic and organisational framework for the
company, to enable it to operate as a franchise business.
In the researcher’s view, while contemplating the complete re-
engineering of a service business such as PC Architectural Design, with
the peculiarities that are specific to architectural practices as discussed
in the introduction, the collection of quantitative data alone would
provide a one dimensional perspective, which would prove insufficient
in evaluating fully the position of the practice (Miller, 1993: 137).
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It is thus assumed, that the principals of the practice have already done
such analysis, and that this is the reason why they wish to re-engineer
their business, even though they understand that such a shift in
paradigm will be particularly disruptive, and will introduce
unpredictability, uncertainty and disrupt current plans, taking into
account that according to Miller (1993: 57) management relies on the
current paradigm in and around which to conduct their current planning.
PC Architectural Design is a service organisation which sells the
knowledge and skills of its human resources, this is the practices key
commodity, and any changes within the organisation could have an
impact on the performance, attitude, and culture of the business thus
the critical area of research would be people related, with the issues to
be assessed being largely emotive.
Thus the objectives of this dissertation are to:
• Gather qualitative data from internal and external stakeholders in
regard to their perceptions, and emotive responses to the status
quo, industry trends, government plans, alternative structures and
strategies and the possible future alternatives for the practice
• Determine based on the research and analysis, what strategy PC
Architectural Design should pursue to re-engineer their business, to
ensure such a strategy will meet with the support of all stakeholders
• Make recommendations as to the future strategy of the firm
Key elements such as qualitative analysis, the learning organisation,
strategy, government policy and planning, need to be studied in an
effort to further the aims and objectives as stated above. The “Areas of
Literature Review” section below provides and insight into the literature
reviewed in chapter 2.
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1.4 AREAS OF LITERATURE REVIEW
The purpose of literature review is to link the research to previous
studies, so as to establish clarity as to the nature and legitimacy of the
research study (Shaw, Thomas, and Brown. 1996: Section 3: 10).
The researcher shall aim to place the research work in context within
the various component issues relating to an surrounding the research
problem. In conducting the literature review, the researcher shall
conduct secondary research into such areas as, organisational
structure, learning organisations, franchising and agencies,
architectural practice management, and government policy on Black
Economic Empowerment. The intention conducting the review of the
above-mentioned literature is to provide a backdrop for the research,
and to objectively and critically review previous studies as they may
relate to the research problem.
1.5 RESEARCH METHODOLOGY AND KEY CONCEPTS
This section discusses the research methods to be utelised in an effort
to accomplish the stated research aims and objectives. This discussion
shall include the relevant target populations, sample sizes, method, and
research design being used. Research can be divided into two primary
methodologies, namely quantitative, and qualitative. Quantitative
research involves the gathering, measuring and tabulating of volumes,
typically numerical or financial data. Such research relies for its validity
on research samples that are measurable. Volume is vital as the size of
the sample could have an impact on the reliability and validity of the
data.
The researcher has isolated three target populations for research,
namely; Architectural firms in the local industry, The employees of PC
Architectural Design, and the Principals of the firm. In researching
these populations, the researcher shall make use of appropriate
sampling methods to obtain feedback from these populations. An
incidental sample of the first population will be taken, based on the
responses received by the researcher. The second and third sampling
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methods, are effectively entire population census methods, as these
populations are very small and manageable, however the methods
employed in gathering data from populations 2 and 3 will be akin to
purposive sampling and key informant interviews respectively.
1.6 RELEVANCE OF THE STUDY TO PC ARCHITECTURAL
DESIGN AND THE ARCHITECUTAL INDUSTRY
In conducting research, the researcher should objectively assess his
field of research in terms of the value the answers to the stated
research will bring to the industry in which the research is conducted.
This research is relevant to the Architectural Design industry, as it aims
through primary and secondary research into the local architectural
design industry, to find and recommend answers to the stated research
problem, to determine if the traditionally nuclear or cluster type
organization of an architectural design practice can be re-engineered to
create a strong and stable organization, which will lend itself to an
agency or franchising model, while not compromising design quality,
technical integrity, and commercial viability for all stakeholders.
As the research is a specific case study of PC Architectural Design, the
research shall bear great relevance to the practice as the findings and
recommendations will relate specifically to the structure, culture and
strategy of the practice, while aiming to align the research findings to
practical mechanisms to realize the corporate goals of the practice.
1.7 LIMITATIONS AND GENERALISABILITY OF THE STUDY
As the research is primarily a case study of PC Architectural Design as
an Architectural Design Practice, no assumptions are made that the
study shall be uniformly generalisable to all architectural practices in all
markets. The study is limited to PC Architectural Design in its context
as an architectural design practice in the predominantly residential
market within the local Gauteng region. As such, the limitations of the
study shall be primarily niche related, in relating the practice to other
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similar external role players (competitors) within the same industry
sector, and within the same given geographical zone.
1.8 DISSERTATION OVERVIEW
Chapter 1 - Provided an introduction to the research, including the
research problem and sub-problems, the aims and objectives of the
research, and a brief introduction to the planned literature review and
research methodologies to be employed.
Chapter 2 - Contains the researchers secondary research into the
subject in the form of the literature review. In this chapter, previous
studies are reviewed in order to put this research into context within the
existing field of knowledge, and to provide a backdrop to the primary
research undertaken.
Chapter 3 - Contains a discussion of research philosophy and
methodology and uses this data in determining the research methods
used in this research, and motivates this reasoning in this chapter 3.
Chapter 4 – This chapter presents the results of the analysis of the
data, and translates these results into findings relevant to the research
problem.
Chapter 5 – This chapter relates the findings to the theory and the
previous literature on the subject, and looks at the value of the findings
as it relates to the field of knowledge and the architectural industry.
Chapter 6 - Here the research findings are used as a base for
recommendations and conclusions as they apply in the business
context. The research limitations are discussed and suggestions are
made for further research
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CHAPTER 2
LITERATURE REVIEW
2.1 INTRODUCTION Chapter one provided and overview of the research problem, and a
summary of the chapters contained in this research. In this chapter the
researcher shall address and critically discuss his secondary research
conducted into literature related to the research problem, with the
intention of placing this research in context with previously conducted
studies and literature on a variety of subjects which relate to the
research problem.
The researcher has determined the various fields in which the literature
review will be conducted. These are detailed in the sections that follow.
The literature which as been studied is divided into categories under
these headings, and discussed accordingly.
2.2 ORGANISATION STRUCTURE, CULTURE AND
COMPENSATION RELATED TO ARCHITECTURAL
PRACTICE MANAGEMENT
Organisation structure and culture are considered to be mutually
interdependent, and inextricably linked to each other. It has been
argued that Organisational structure has an impact on the methods and
value of compensation, which in turn affects the culture of the
organisation, thus compensation should be considered on par with
culture and structure. In this section the researcher shall discuss
previous studies in the above-mentioned fields, and relate these to
recent studies on architectural practice management.
2.2.1 ORGANISATION STRUCTURE
Organisational structure, whether specifically stated, implied, or
intrinsically understood, is inherent in all organisations. This may vary
from completely informal structures, where the “structure” is loosely
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held together with interdependencies and loose associations, such as
the entrepreneurial structure (Weinshall, 1971, in Handy, 1993) as
illustrated in figure 2.1 below, in which it is apparent that the Principal is
central to the activity, and there exists a “cluster” type structure with
lines to and from the nucleus of this cluster (the Chief Executive in the
figure) and between components of the cluster with each other. This
structure is informal and organisational decision-making is centralized.
This structure is perceived to be the typical structure employed in the
local architectural industry, wherein the flexibility of the cluster is
integral to the vacillating nature of architectural project work. This
allows the principals to make use of this loose structure to increase the
cluster on a project specific need basis, and reduce as needed.
As structure provides the mechanism for implementing plans and for
utilising resources (Kakabadse, et al. 1987: 314), this structure could
severely limit this objective and result the principal in carrying the sole
burden of decision making, or suffering disjointed decisions or actions
taken by components of the cluster who have acted on the strengths of
their own relationships with each other excluding the principal.
CE
Figure 2.1: Entrepreneurial Organisation Structure
Source: Weinshall, 1971, in Handy, 1993: 257.
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It is the researchers position that this cluster type structure has limited
long term functionality, and in the long term will act against the possible
expansion of the firm by keeping it small, actively preventing
decentralisation of decision-making, and not allowing some formal
structure with which staff and management can associate themselves.
Interestingly, many architectural practices seek to maintain small and
manageable clusters, which are informally built around an association,
or co-operative basis, with other entities and professionals who are
external to the organisation. This observation is supported by Kang
and Chen (2002) who observed that most architecture associations
utilise a simple structure, which, based on their study, will not benefit
their business in the long term. They propose that architects should
consider developing new structures to foster competitiveness and
strategic expansion. This is further supported by Zweig (2003) who
contends that there could be any number of reasons why architectural
practices remain small, all of which stem from the unwillingness of the
principal/s to take the requisite actions to create an expansion oriented
organisation.
This could be due to the decision of the owners to keep their practice
small and focused, in order to enjoy the design control and autonomy
that this allows. (Strogoff &0 2004) As an argument in favour of
this decision, Strogoff argues that this decision results in less stress
and sleepless nights, with the Architect’s attention free to focus on
design, without the burden of large payrolls and other demands on their
time and attention.
This may well be by design, as expressed by Kakbadse et al. (1987:
314) in their observation that the shape and pattern of an organisation
would depend on its size. The principals determine the size of the
organisation. It would be interesting to discover if the desire to maintain
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small practices has been the clearly stated strategy since their practices
inception, or if it has been brought about by other factors.
Structure comes about as a result of a need for the organisation to
satisfy two pressures, namely uniformity, and diversity. (Handy, 1993:
255) Specifically, Handy (1993: 255) argues that the pressure for
uniformity manifests itself in terms of benefits to be sought from such
things as lowered costs through standardization, the needs for
controlling processes, fostering interchangeability, product
standardisation needs, a possible need for specialization, and the need
for central control. Pressures for diversity are manifested in terms of
an organisation seeking to diversify in terms of its regional operations,
or the markets in which it operates, the products it is producing, the use
of technologies, or the goals of the organisation.
Figure 2.2 below represents a typical functional organisational structure
as depicted by Weinshall (1971, in Handy, 1993) which represents a
more formalized structure, with clearly defined functions falling within
portfolios, and an understandable hierarchy.
Figure 2.2: Functional Organisation Structure Source: Weinshall, 1971, in Handy, 1993: 257.
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This structure, as an example would generically answer up to the stated
pressures above, for most organisations. It is apparent that this applies
to the “stereotypical” product-oriented organisation, prevalent in
business thinking in the latter third of the twentieth century. The
question this raises is if this organisational model, as adapted where
necessary, would provide a workable template for a project-based
service organisation with the inherent peculiarities specific to
Architectural Design Practices, as discussed in chapter one.
This question does not appear to have been answered in any specific
empirical study, however, Kang and Chen, in their study into
organisational limitations and strategy in architectural associations in
Taiwan, (2002) related their findings and postulated need for architects
to adopt new structures that would be more appropriate for their market
environment.
This study considered the matrix structure, wherein the primary strength
associated with this structure was the coordination of tasks across
diverse functional zones. It was concluded, however, that the
disadvantages of being too complex, and confusing, while also
potentially fostering an incubation environment for power struggles
internally. They further recognised the need to retain some form of
direct command structure. The network structure was also considered,
and was highly recommended for use, due to the freedom the structure
would give to architects to network with professionals or specialists
externally, while allowing themselves to focus on their core
competencies, design and project programming. The study cautioned
that this structure, whilst most suitable in their finding, gave the
principals limited control, than in traditional organisations, where
intellectual property security may be at risk due to diluted loyalty within
the network.
23
The researcher questions the validity of the above report in its
generalisability and applicability to the local context. The primary
motivation for this is that the researcher agrees largely with Strogoff
(2004) who found that the single most important determinant in the
organisational growth of an architectural firm is the gaining of an
understanding of how the principal likes to work, how much he/she is
prepared to relinquish, and the cultural foundation of the firm.
Strogoff (2004) isolated five stages of a design business, as it matures.
These stages have very specific phenomena, and range from infancy,
where the owner/s are very central to all decisions and actions. In
infancy, the business is entirely dependant on the owner, as manifested
by period of non-production or confusion in the owner’s absence. The
infancy stage is followed by Concentration, as the firm starts to prosper
and face the market. The owner becomes less operationally involved,
and is more focused in strategy formulation. After concentration, the
practice enters a phase of Momentum, as the firm becomes recognised
in the industry. It has products, and is becoming a known stakeholder in
the industry, allowing the owner to start revisiting the mission, refining
operations, and play a leadership role. Stability follows from the
momentum stage, where there exists a predictable stream of work, and
repeat business, the firm may diversify in its scope, and invest in further
establishment, and defines future strategic milestones. IN this stage,
the owner is mentor to staff, while holding the organisation on course
and focused on its mission.
The final stage, is referred to as Mastery wherein the practice has
achieved a size and stability such that it is no longer dependent on the
owner, and transition of ownership can take place.
In considering these stages, and the reality that practices may develop
into these phases at different paces, or that they may, consciously, or
otherwise remain within a specific stage, and not progress into the next
stage of maturity. The reality that exists in the local architectural market
24
is that architectural practices are typically SMME enterprises, choosing
to remain in the infancy, and possibly the concentration stages, but
seldom passing beyond this.
It is the researchers view that the Functional Organisation Structure, as
adapted and modified to cater for the stages of growth in the
organisational life cycle as discussed above, would prove workable and
sufficiently malleable to afford maximum advancement between stages,
while being attentive to the pressures discussed earlier in this section.
2..2.2 THE CULTURE OF ORGANISATIONS
Organisational culture relates to the attitudes, mores, shared values,
styles and behaviour of an organisation (Kakabadse et al. 1987) Culture
is considered to be an integral and dependent on the structure of the
organisation, as evidenced by the observations made by Kakabadse et
al. (1987: 346) in stating that the act of reorganizing structures is a
relatively small exercise, while the attainment of acceptance of the
changes, and the settling of the organisation into this new model is the
real challenge.
Organisational cultures are as diverse as national cultures are. Cultures
are a composite of the values, and beliefs of a group, they are fostered
by history, tradition and the nature of power prevalent within the
culture. (Handy, 1993: 180) Culture permeates the thinking,
mannerisms, methods of execution, manageability, and personality of
the individuals and the organisation. While it has been stated that
Structure defines, the culture, interestingly Handy associates structure
to culture in equating the structure of the organisation as a
manifestation of the culture.
Management is advised to seek an appropriate match between people
and systems, task and environment. In other words, match your
structure appropriately to your culture. (Handy, 1993) (Kakabadse et al.
1987) Although cultures are as diverse as there are organisations,
25
there are essentially four organisational cultures, (Harrison, in Handy,
1993: 181) namely:
• Power Culture: This culture typically suits small entrepreneurial
organisations. This culture diagrammatically is depicted as a
web structure, with a central power source. This culture is
workable within small organisations, but its workability is brought
into question as the organisation grows. (Handy, 1993) This
may result in the prevailing culture limiting the growth potential
of the organisation. This culture type could be closely
approximated by the entrepreneurial structure discussed in the
previous section, and would definitely be found in architectural
organisations in their infancy stage of growth. (Strogoff, 2004)
• Role Culture: Role cultures are associated with bureaucracy,
rely heavily on logic, and rationality. Emphasis is on procedures,
job descriptions, defined functions and methodologies,
protocols, and codes and rules. The structure that suits this type
of culture would arguably be that of the functional organisation
structure, as discussed in the previous sub-section. Relating this
culture to the growth stages of architectural businesses
(Strogoff, 2004) this would arguably match closely the
concentration stage, and may remain valid as a culture well into
and possibly throughout the Momentum stage.
• Task Culture: This culture is task or project oriented. (Handy,
1993) the entire emphasis is on completing the task at hand.
Individuals within this culture are depended on to work as a
team and to share the focus, and responsibility in accordance
with their task role. There is a high degree of individual control
over their work, and they are primarily judged by the results of
their efforts. The organisational structure best matched to this
culture, would be the matrix structure, wherein units within a
matrix align themselves according to the task and perform their
specialist function to complete their product, which in turn may
26
be perceived as a sub product necessary for the completion of
the next unit’s product, and so on. Essentially, the matrix
organisation has a series of interrelated communication
channels, within and established hierarchy, which understand
that the whole is more effective than the sum of it’s parts. This
culture may be most closely approximated to the stability and
mastery stages of Strogoff’s (2004) model.
• Person Culture: The person culture is highly individualized, and
may be perceived as a “sharing for personal benefit” type of
culture, wherein the individuals have recognised the benefit of
mutual resources, facilities, personnel, etc (Handy, 1993: 190)
but see these benefits as subordinate to their own personal
interests. Such a culture would be prevalent in such places as
estate agencies, law chambers, social groups, communal office
facilities, and communal centers, such as artists colonies.
Ironically, Handy (1993) isolates architects as an example of this
culture type, which, from the writer’s perspective, and with the
exception of the possibility of practices in which architects may
be acting as independent practitioners with shared resources, is
not a true example of this culture type.
2.2.3 COMPENSATION SYSTEMS
Pay as an incentive. This is the issue being investigated in this sub-
section. Is it really an incentive to improve productivity, stability, and
efficiency? Can the wrong compensation system harm the business, or
can the right system, poorly implemented, and administered, still
produce the desired results?
Simply put, compensation is useful as an incentive, (Handy, 1993) So
much so that Gerber, Nel, and van Dyk (1998: 48) state that while
theorists cannot concur on the effect of compensation on employee
attitudes, they opine that it is extremely important in determining the
employees’ attitude toward performance, and their actual production.
27
Pay should, according to Handy, (1993) be a very motivating agent, yet
in many cases, organisations have not made use of pay as a lever for
productivity, or performance, perceiving remuneration as related to
seniority, longevity, and experience, as opposed to results. It is argued
further that compensation systems are made difficult to implement in
organisations which do not practice transparency on pay levels, or in
which it is difficult to assess the individuals contribution.
Essentially compensation management theory has isolated that the
reason employees are paid is because they are paid to motivate them
to work. (Gerber, et al. 1998: 185) Compensation systems should
provide an equitable relationship between the input of the employee,
and the outcome provided by the employer. One of the biggest
perceived barriers to stable expansion in architectural firms could be
argued to be that, due to the fluctuation in workload, (Bayer, Gann, and
Salter, 2004) and, due to the fact that personnel are the single highest
expense in architectural practices, (Strogoff, 2004: 3) is the decision to
employ personnel, and how they will be compensated.
Compensation in architectural design practices in South Africa could
arguably be perceived to be typical, with employees either earning fixed
salaries, with industry related benefits, and incentives related to the
completion of project milestones, on a variable ratio at the discretion of
the practice. As immense cash-flow pressures exists, primarily due to
the negative cash-flow nature of architectural fee structures, principals
may justify not incentivising staff by fostering a feeling of entitlement to
the equity that would ordinarily be used as incentive, due to their
exposure to risk.
Performance-based pay systems, which are gaining ground in South
Africa (Gerber et al. 1998) entail devising a remuneration structure in
which pay is directly related to performance of an individual or group.
28
Some possibly relevant performance-based systems include the
following standard systems:
• Piece rate plans wherein the system of payment is a price per
unit produced
• Commission Schemes Typically aimed at sales personnel,
where a percentage of the revenue generated is paid to the
individual as commission. Percentages vary based on industry
norms, and individual company policy
• Time savings plans Time based targets are assigned for tasks,
and performance against these are rewarded accordingly
• Profit share schemes This incentive is typically associate with
executives who have profit targets, and are motivated to exceed
these by the implementation of a scheme in which profits in
excess of the targets are allocated to employees
• Ad-hoc bonuses Typically, this would be considered the year-
end bonus. These are often discretionary bonuses and are
perceived as being a surprise. Their use as an incentive is
questionable and Gerber et al. refer to them as ‘reward’ bonuses
• Long-term incentive schemes These include share options in
the organisation, share schemes, or share trusts. This system is
effective in linking the interests of personnel with those of
management, and effectively ensures the employee who has
share options will only realize a value commensurate with the
value he creates.
In considering performance-based pay systems, there must be due
attention paid to the organisational environment and culture, to
determine if it lends itself to adopting a performance-based pay system.
In addition, the system must be structured to make it possible for
objectives to be accomplished, and must have clear and measurable
29
objectives. The system should further consider who can participate in
the system, and what measuring instruments will be employed. Once
implemented such a system should be monitored and developed further
based on the proven workability of the system. (Gerber, et al. 1998)
As one of the key obstacles to expansion in the architectural design
industry is the procurement of personnel and the cost of retaining these
resources. The researcher believes that through the application and
testing of a suitable compensation system, as gauged against the
structural and cultural organisational environment, which specifically
rewards key personnel on a performance-based pay system, this
consideration could be resolved without too great a burden on the
financial resources of the practice.
2.3 FRANCHISING AND SIMILAR STRUCTURES
Franchising, the act of a franchisor (typically a manufacturer, or similar)
granting to a franchisee (typically a retailer, distributor, or similar), the
rights to make use of the knowledge, sell the products, and trade on the
established brand and goodwill of the franchisor, (Illetschko, Kurt, For
Franchising Association South Africa, 2005) has been taken out of
context and confused with other distribution systems, such as
distributorships, agencies, and licensing agreements. (Lipkin & Parker,
2000) For the sake of clarity, these shall be clarified below so that no
confusion exists.
Franchising is a collaboration between an independent person and a
company that wishes to expand its business through the franchise
model. This means that the company is seeking to expand its business
by granting a third party (franchisee) the right to use its intellectual
properties and assets, including trading name, operational procedures,
and know-how. For this to work, the franchisor exercises certain
controls over the franchisee, which may translate into limitations on how
he will conduct business, reporting systems, and the financial
30
consideration is the payment of a royalty from franchisee to franchisor.
(Lipkin & Parker, 2000: 203)
Distributorships exist where a third party purchases goods from a
supplier or manufacturer with the intention of selling them on to another
party or other parties. While such elements as rebates, minimum
turnover clauses, and sales quotas may exist as contractual ties
between the two parties, this is not a franchise. The most obvious
difference is that the distributor would not usually make use of the
suppliers trading name. (Lipkin & Parker, 2000: 203)
Agency agreements are closer to distributorships, except that the agent
would typically not purchase the goods to on-sell, but would hold stock
belonging to the supplier, and earn commission for their sales. (Lipkin &
Parker, 2000: 203)
Licensing is perceived to be typically more associated with the
manufacturing sector than the distribution and marketing of
commodities, and beyond the granting of the license and possible
quality controls, and standardisation requirements, the licensor would
not have much control over the manner in which the licensee operates
his business. (Lipkin & Parker, 2000: 203)
The word franchise immediately conjures up images of fast food outlets,
hardware stores, and steakhouses. The feasibility of developing a
workable franchising model for architectural design services, is as yet
undetermined, as it has not been done before. On clarification of the
above different distribution agreements, the researcher would argue
that a hybrid structure may need to be developed, which utilizes the
strengths of each structure, while being realistic and workable within the
unusual context of the architectural design industry.
To this end, the definition and very narrow classification of license
agreements as put forward by Lipkin and Parker (2000) and discussed
above, is not observed by the researcher to encompass all possible
31
configurations of license agreements. An example of this, could be the
establishment of best practice manuals, systems, procedures and
structures which are owned by a license holder who licenses these
(purely intellectual) properties to a licensee who makes use of these
licensed assets as an operator. This could be done for a license fee,
which could be either fixed or related to turnover.
In order to embark on franchising a business, Shane (2005: 67)
suggests that one should first assess the ‘franchisability’ of a business
concept. In general, three factors need to be present to ensure a
business concept is franchisable. These are; that the business is based
on a proven system for serving end customers, that the system can be
reduced to a set of operating guidelines in writing, and that there exists
a big enough potential market for the concept to justify the costs of
franchise development.
The researcher believes that by implementing an appropriate
organisational structure and enhancing the culture of PC Architectural
Design, the practice could readily comply with the first requirement. The
third component does exists, as evidenced by the sheer volume of
people undertaking construction work, and the practices continued
activity over its history, despite such things as interest rate fluctuations.
The middle component would need to be developed by the practice,
and the researcher suggests that empirical research is conducted into
the perceived missing elements in the architectural curricula.
The research problem in mention involves a rethink of the strategic
plans of the practice, and the gaining of an understanding of the
principals of re-engineering core business processes. This will be
discussed in the following section.
32
2.4 STRATEGIC MANAGEMENT AND BUSINESS PROCESS RE-
ENGINEERING
Strategic management can be loosely defined as the continuous and
ever-changing process of management, aimed at keeping an
organisation aligned with its environment, to maintain and maximize
opportunities and predict and minimize barriers to future success to the
attainment of organisation-wide goals (Certo and Peter. 1990: 5)(Miller,
A. 1993: xxiv)
In section 2.1 above, Strogoff’s (2004) stages of growth were
discussed, and related to allied structures and cultures by way of
analyzing most appropriate fit. From this, it is apparent that as an
Architectural Design practice grows and matures, its structure, and
culture must also change to adapt to the new focus of the business.
This change is driven and determined by the strategy of the
organisation. This has to be borne in mind when formulating, revising
and implementing strategy.
Strategy formulation, according to Miller (1993) can be perceived to
comprise a sequential series of strategies toward the attainment of
competitive advantage. This is represented in Figure 2.3 below.
Figure 2.3. Levels of Strategy Formulation
Source: (Miller, 1993: 154)
From this diagram, one can observe that these levels of strategy
combine in their core areas to the attainment of the goal which is
competitive advantage. International level strategy involves strategic
activities within multi-national concerns, and could involve planning of
Operations-Level
Strategy
COMPETITIVE ADVANTAGE
Business-Level
Strategy
Corporate-Level
Strategy
International-Level
Strategy
33
production in companies that have low labour costs, or developing into
countries, which provide tax benefits for global enterprises, with
operations within their borders. As this research is specifically local,
this level of strategy has no relevance and shall not be discussed
further.
Corporate Level Strategy involves the attainment of competitive
advantage through corporate level actions. This may include
diversification, or vertical integration to enhance the competitive
position of the corporation. The decision to adopt a franchise or
licensee based model, and pursue this line of distribution, may be seen
as a corporate level strategic decision, however it would involve the
implementation of business and operations level strategies which make
this strategic intent a reality. Business Level Strategy involves the
development and refinement of the business scope, direction, mission,
and vision. This level of strategy allows for the positioning of the
business for competitive advantage. Operations level Strategy involves
the improvement of the organisations operational processes to increase
value to the consumer, and create consistency and continuity of
processes in order to enhance the firm’s competitive advantage. (Miller,
A. 1993)
As illuminated in the previous section on franchising, in order to ensure
a business concept or enterprise can be franchised, one of the three
elements required is the standardisation of processes and the
documentation of these processes. Shane (2005: 67) It was identified
that this was one element which had not yet been addressed by PC
Architectural Design. As this would fall within the Operations Level
Strategy, this will be discussed in the next sub-section.
2.4.1 OPERATIONS LEVEL STRATEGY
The strategic role of operations, according to Miller, (1993: 159) lies in
developing operational strategies which enable a business to do certain
things better than the competition can. This is based on a company
34
adopting the perspective of being a collection of evolving capabilities
instead of being comprised of products, customers, and business units.
Strategic Management, on an operations level, typically refers to two
strategic approaches, namely Total Quality Management (TQM) and
Business or Core Process Re-engineering. (BPR /CPR) TQM works by
taking what exists and gradually improving and refining it. It aims to
make incremental improvements, within the broader system, by working
from the bottom up. This is done by making improvements by the use of
a continuous stream of short-range projects. CPR looks to make radical
improvements through a process of re-engineering, instead of
incremental improvements within the system, the improvements are on
the system. This is done by taking a top down approach, and is not a
continuous process. (Miller, 1993: 166) Proponents of the system
typically view these approaches as being distinctly different, for
example TQM has been is considered by Doyle (1998: 428) as an
essential ingredient for competitiveness, yet no comment is made in his
study on Marketing Management and Strategy, about CPR. Miller
(1993: 168-169) on the other hand, perceives these processes as being
complimentary, noting that businesses pass through growth stages,
wherein the correct operational strategy would match the growth stage
the business finds itself in. If one considers Strogoff’s (2004) four
stages of growth of a design business, as discussed, one can see that
the strategy which would be workable in the infancy stage, would not
necessarily work in the concentration stage, which in turn would find it’s
ideal strategy not being effective if applied to the stability stage, and so
on.
Figure 2.4 below illustrates Miller’s (1993: 169) model depicting the
relationship between TQM and CPR. In this model, each “S” curve
represents a generation of process design, or related again to Strogoff’s
stages, each “S” curve may be seen to represent a specific stage, or a
given strategic paradigm. Within each stage, as represented by (1) use
is made of TQM to enhance the competitive advantage through
35
incremental and adaptive changes within the paradigm. CPR is the
mechanism which facilitates the change in “gear” of the business,
effective shifting from one strategic paradigm, to the next. This involves
the revolutionary generative changes, which entail short periods of
disruption, and is represented by (2) below. A, B, and C represent two
different paradigms, for example, (after Strogoff, 2004) A would be
Infancy and B would represent Concentration with C representing
Momentum, and so on.
Within each paradigm, the business, after Tuckman, (1965) could be
perceived to progress though the following stages enumerated as per
figure 2.4 below.
i. Forming Stage in the development of a group / Establishing of a new paradigm
ii. Storming Stage – Establishing strengths, choose sides, and establish “pecking order”
iii. Norming Stage – Agreements, acceptance, and Team development
iv. Performing Stage – Focus on the job of work for which the team is accountable
Figure 2.4 Diagrammatic Comparison between TQM and BPR Source: Miller,1993: 169
The above figure is relevant to this research as it serves as graphical
map through which the principals of PC Architectural Design can find
where their practice currently stands, and against which, the researcher
can make recommendations for a workable company strategy.
36
The final area of literature review involves the assessment of the
current political climate and government planning, and the impact this
has on PC Architectural Design in terms of answering the research
problem and sub-problems. This is discussed in the next section.
2.5 GOVERNMENT POLICY REGARDING BLACK ECONOMIC
EMPOWERMENT AND SKILLS DEVELOPMENT
In this section, the researcher will discuss current National legislation as
it relates to PC Architectural Design and the impact it may have on the
research sub-problem, which is to Discover the BEE position and
strategy of other Architectural Design practices, as well as their success
in implementation of their strategy, and the expected longevity of their
BEE position, and use this to develop and recommend a BEE strategy,
which would position the firm uniquely and be a key strategic
differentiator for the firm.
As the documents studied in this section include government acts and
the Construction Sector Education and Training Authority Sector Skills
Plan, these will be discussed by sub-heading for the sake of clarity.
2.5.1 BROAD-BASED BLACK ECONOMIC EMPOWERMENT ACT
(Act No. 53 of 2003)
The act above was enacted by government in order to ‘Establish a
legislative framework for the promotion of black economic
empowerment; to empower the Minister to issue codes of good practice
and to publish transformation charters; to establish the Black Economic
Empowerment Advisory Council; and to provide for matters connected
therewith.’
The act recognises that under the former government regime, race had
been used to control and limit access to the country’s active resources
and education. As a result of this, the act argues that S.A. performs
below its potential, and that the economy would benefit from policy that
37
actively seeks to create equality in empowerment of previously
disadvantaged individuals.
The act aims to accomplish this by promoting economic transformation
in order to provide for meaningful economic participation of black
people, with the intention of achieving a substantial change in the racial
make-up of ownership in, and skilled occupational activity of existing
and forming enterprises. Additional objectives include the increasing
ownership and management of enterprise by black women, promoting
investment programs, and access to finance, which support these
objectives, empowering rural and local communities through facilitating
access to land, infrastructure, economic activities and skills training.
This act is broad based and far reaching. It is the researcher’s opinion
that any South African enterprise, regardless of size or market sector,
should minimally understand BEE policy, and its potential and real
impact on their business. The transformational charters developed by
government include and impact such areas of business as ownership,
employee equity, skills development, and training, and the status of
compliances external to the business enterprise, placing pressure on
enterprises to deal with suppliers, and contractors who have an
operational BEE strategy.
With SMME type architectural firms, who do not deal directly with
government, and do not purchase or hold tangible stock or materials,
there may exist a sentiment that BEE would not apply in this sector of
industry.
2.5.2 SKILLS DEVELOPMENT ACT (Act No. 97 of 1998)
The above act, which comprises part of the governments policy on
Black Economic Empowerment, has as its primary purpose the
development of a skills development framework to create and fund
national skills development across all economic sectors.
38
Under this act, Sector Education and Training Authorities (SETA) are to
be established for each economic sector. These SETAs are to compile
and implement a Sector Skills Plan, and to ensure sector wide skills
development in compliance with the SA Qualifications Authority (SAQA)
act. (1995) Each sector is to establish Learnerships which provide
skills training which is work place based, and which should comply with
the specific requirements of the act, for example, the learnership should
provide training which amounts to a qualification recognised by SAQA.
Under this act, the Construction Education and Training Authority
(CETA) has been establish to act as the education and training
authority for the construction authority, which includes all related
professional industries, including Architecture. CETA has, as part of its
charter under this act, developed the sector skills plan. This shall be
discussed in the following section.
2.5.3 CETA Sector Skills Plan (undated)
Under the CETA Sector Skills Plan, Architecture falls under the
category of professionals servicing the industry. The formal sector,
which is well documented in this plan, has well-established training and
skills development courses, which have already been developed and
approved by SAQA and the Institute of Architects. (This falls under the
CETA) The informal sector, which is poorly documented, and which
comprises primarily the residential alterations and additions market,
represented an estimated R500 Million in 1999. The informal nature of
this sector, and the reality that little controls exist in this sector, make it
a grey area for CETA. The researcher asserts that the consumer who
would make use of informal contractors would not ordinarily verify the
formal education of the ‘professional’ who draws the building plans, if
plans are drawn at all.
It is the researcher’s position that an opportunity exists for PC
Architectural Design to capitalize on the formalisation and development
39
of the skills of individuals operating in this informal sector, and, within
the parameters of BEE and the Skills Development Act.
2.6 Summary
In this chapter the researcher found a relationship between previous
and seemingly unrelated studies on organisational structures, culture,
and architectural practice management and strategy. In doing this,
The researcher found that the cluster type structure has limited long
term functionality, and in the long term will act against the possible
expansion of a practice by keeping it small, actively preventing
decentralisation of decision-making, and not allowing some formal
structure with which staff and management can associate themselves.
It is the researchers view that the Functional Organisation Structure, as
adapted and modified to cater for the stages of growth in the
organisational life cycle as discussed above, would prove workable and
sufficiently malleable to afford maximum advancement between stages,
while being attentive to the pressures discussed earlier in this section.
As one of the key obstacles to expansion in the architectural design
industry is the procurement of personnel and the cost of retaining these
resources. The researcher believes that through the application and
testing of a suitable compensation system, as gauged against the
structural and cultural organisational environment, which specifically
rewards key personnel on a performance-based pay system, this
consideration could be resolved without too great a burden on the
financial resources of the practice.
The researcher believes that by implementing an appropriate
organisational structure and enhancing the culture of PC Architectural
Design, the practice could readily comply with the first requirement. The
third component does exists, as evidenced by the sheer volume of
people undertaking construction work, and the practices continued
activity over its history, despite such things as interest rate fluctuations.
40
The middle component would need to be developed by the practice,
and the researcher suggests that empirical research is conducted into
the perceived missing elements in the architectural curricula.
In attempting to develop a strategic plan for the Practice, it would be
necessary to identify the current strategic position, and the current
stage of growth of the practice, and based on this, determine the type
and nature of the operational strategy to adopt.
BEE policy is a far reaching element which is unavoidable for business
in South Africa, the researcher suggests that other architectural firms
are surveyed to determine their BEE position.
In this chapter, the researcher has, through secondary research, placed
PC Architectural Design and the situation facing the practice in context,
in order to provide direction and focus for the research being
undertaken. In the following chapter, the researcher shall discuss and
motivate the chosen research methodology selected for this research
work.
41
CHAPTER 3
RESEARCH METHODOLOGY
3.1 INTRODUCTION In chapter 2, a critical review was conducted into literature covering the
component fields, which touch on or have an impact on the research
question. Despite there being voluminous research, case studies and
writings on separate issues which may parallel or support the subject, it
is clear the current state of knowledge does not encompass the specific
research questions, but has served to place this research in context.
This chapter will detail the research methodology used to research the
areas relevant to forming a substantive theory regarding the re-
engineering of PC Architectural Design
In conducting a program of research, the researcher must have placed
sufficient emphasis on developing a research framework, which
encapsulates the planning, resources, design, organisation, analysis,
and recommendations surrounding the research subject.
In establishing this framework, the researcher would typically discuss
and debate such things as research methods, research paradigms and
philosophy, investigate his own ontological position and epistemological
approach, as they relate to the nature of the research question, and
select the ‘best fit’, ensuring to motivate the reasoning behind this
selection.
3.2 METHODOLOGICAL PHILOSOPHY
The field of business research can effectively be divided into two
branches of research philosophy, the quantitative positivist approach
and the qualitative interpretivist approach. In this section these two will
be discussed and compared in an effort to bring about an
42
understanding of the two and to select the most appropriate philosophy
for the research problem at hand.
3.2.1 POSITIVIST vs INTERPRETIVIST
In business research there exists an ongoing debate which divides two
schools of research philosophy. These are discussed broadly below.
The Positivist Quantitative approach has as its aims, the attainment
of a generalized truth, through the process of forming a hypothesis and
then testing it. Here the researcher, who perceives himself to be
external to the subject, is objective and independent. The research
work aims to address the subject factually, reduce phenomena into
simpler elements, and find fundamental laws. The belief here is that the
human element is detached from science and thus is value free.
The methods employed to conduct this research are quantitative,
wherein the researcher will attempt to operationalise concepts so as to
make them capable of measurement. Typically this methodological
paradigm would require large sample sizes as validity is reliant on a
sizeable sample which is a typical representation of the subject. The
researcher seeks to find correlations, variances and deviations in their
statistical analysis which support, prove or disprove the hypothesis.
(Shaw et al. 1996) This paradigm is also referred to as the hypothetico-
deductive method.
The Interpretivist Qualitative approach is based on the philosophical
and ontological belief that the world is subjective and socially
constructed. This gives the researcher a subjective foundation for is
research. In this paradigm, science is driven by human interest. This
introduces a magnitude of variables and arbitraries, such as would
render the subject impossible to measure to the positivist researcher.
Research methods that are applied within this paradigm include the use
of multiple qualitative methods to establish different views of
43
phenomena, using small samples which are investigated in depth and if
possible over a period of time. The researchers should attempt to focus
on gaining an understanding of the issues, from a panoramic
perspective, and attempt to get to the underlying significances in order
to arrive at an idea or theory through induction from the data being
analysed. (Shaw et al. 1996) This paradigm is also referred to as the
inductive method.
Integral to the above discussion, there exists another pair of
fundamental assumptions, which need to be discussed in order to
establish the most appropriate methodological paradigm for this
research work.
3.2.2 ONTOLOGY
Jankowicz (2000: 109) describes ontology as having to do with ‘the
way in which you notice things; with your basic assumptions about
what, in your view, your topic is actually about.’ Thus the perspective of
the researcher, as determined by variables such as age, education,
social status, membership or association, plays a significant role in the
focus and direction of the research work.
The ontological position of the researcher is that organisations are
comprised of individuals who are brought together by a common
purpose. The success or failure of an organisation may lie deeply in the
culture and beliefs of the people within it. Thus peoples attitude towards
structure, culture, responsibility, and empowerment form an integral
component in strategic development or redevelopment of a business
entity.
PC Architectural is a small company with highly individualized staff who
all have their own life experiences and perspective. Quantitative
analysis is too one dimensional and will not provide a sufficiently
detailed picture of the status quo, or the staff’s propensity to adopt a
shift in company paradigm, primarily due to the individualized culture
44
and the small staff compliment which would not lend itself to a big
enough sample size to arrive at a generalised law.
3.2.3 EPISTEMOLOGY
Epistemology involves the individual’s idea or theory of what comprises
knowledge, what would indicate evidence or proof and what would not.
(Jankowicz, 2000) It would be necessary for a researcher to qualify in
his research design, what his epistemological standpoint is, so as to
ensure the reader understands the parameters that govern his
research.
In this research work, the researcher is attempting to arrive at a
panoramic view of the current environment, including the sentiment of
the people within the practice, their plans, desires and intentions, as
well as the current thinking of the industry, combined with what lies on
the horizon, as postulated by government policy, and allied industries,
in order to put together a strategic framework for the re-engineering of
this practice, and its operational methodologies and strategic focus to
Capitalize on the potential opportunities this research exposes.
The ontological stand and epistemological perspective of the
researcher supports the use of the inductive paradigm utilising
qualitative research methods. The research design shall be discussed
in the following section.
3.3 RESEARCH DESIGN AND STRATEGY
The research problem as stated needs to be resolved through
appropriate research methods. The selection of the most appropriate
method is the subject of research strategy and design.
Design is defined by Selltiz et al. (1981) (in Jankowicz; 2000: 190) as
the deliberately planned ‘arrangement of conditions for analysis and
collection of data in a manner that aims to combine relevance to the
research purpose with the economy of procedure’.
45
In complying with this definition, a research design should contain an
understanding of the research objectives, suggest the sources from
which data should be gathered, and consider possible research
limitations, such as time, or resources, to utelise the most suitable
method of research to arrive at the postulated outcome.
Jankowicz (2000) mentions 4 main methods of research which are
commonly available for use in research, namely:
• Archival Method: Questions are directed at written
sources and people, concerning issues and events in the past in
an effort to understand the present, and foresee the future.
• The Case-Study Method: Past and present issues are explored
as they affect a specific targeted individual, group, organisational
unit, or group of organisational units, with the aim of using data
gathered to make recommendations for the future
• The Survey: Questions are directed at relatively
large groups of individuals in an attempt to explore issues that
are current. Surveys could be conducted through a variety of
vehicles, ranging from written formal questionnaires to
unstructured interviews
• The field experiment: In which the researcher identifies the
importance of one or more variables in a situation, and sets
about testing these through experimental mechanisms.
In order to fit the research design to the research problem, it would be
necessary to clearly define the context in which the problem fits.
In the problem statement in Chapter one, the research problem
highlighted certain stakeholders and role players that have to be taken
into consideration. The researcher has identified that as this panoramic
perspective is what is being sought in attempting to resolve the
research question, the most appropriate path to take would be to
undertake a case study of PC Architectural Design, as this is a single
46
organisational entity, in which the past and present issues can be
investigated.
In order to place the practice within its market context, with external
stakeholders and role players such as competitors, a comparative case
study method will be adopted, seeking to compare PC Architectural
Design with other Architectural firms in the local market, in order to
compile relevant data. Within the case study method, the primary
method of internal data collection will be conducted through personal
interviews over the period of the research. External stakeholder and
competitor research will be conducted by way of survey questionnaire.
This case study is conducted over a period of eighteen months.
3.4 POPULATIONS AND SAMPLING
3.4.1 POPULATIONS
A population can be defined as that which makes up the object of a
study. In this case, it does not mean only PC Architectural Design, but
all stakeholders and role players as described in chapter one.
In order to fully answer the research question, being ‘to determine if the
traditionally nuclear organization of an architectural design practice can
be re-engineered to create a strong and stable organization, which will
lend itself to an agency or franchising model, while not compromising
design quality, technical integrity, and commercial viability for all
stakeholders’, the research will need to source data from the following
populations:
• The first population, namely the Architectural Practices who are
competing in the same local market as PC Architectural Design
This population is approximately 300-350 entities.
• The second population, namely all employees of PC
Architectural Design. This population measures fifteen staff, not
including the principals.
47
• The third population, namely the Principals of PC Architectural
Design, which measures three people.
3.4.2 SAMPLING
A sample is a selection of a population, which is representative of the
population, thus data analysed from the sample can allow conclusions
to be made about the population the sample represents.
This is done in research to lessen the limitations and constraints on the
researcher, such as time, and economics, as well as logistics.
As the first population identified, the architects, will be communicated
with by means of survey questionnaires delivered by facsimile, and
possibly by telephone call to clarify and request a response, there is still
not any assurance that a significant number of responses will be
elicited. Thus, in drawing a comparison with other role players in the
local market, sampling methods will be utelised to economise on time.
With regard to the second and third populations mentioned, however,
being employees and principals of PC Architectural Design, the
population is small enough to allow a study of the entire population.
3.4.2.1 SAMPLING METHODS
Sampling falls broadly into two primary categories, namely; non-
probability samples and probability samples. Probability samples
involve the deliberate and structured selection of a random sample from
a population. This is typically done before data gathering commences.
Types of probability samples include:
• Simple Random Sample: A straightforward sampling method of
taking all the people in the population and not classifying them
any further. Results from this sample may be generalised onto
that specific population, but not beyond it.
• Stratified Random Sample: A more detailed sample grouping
method wherein the population is broken down into sub-groups
48
to provide comparative data for analysis within sub-groups based
on certain criteria, for example, age, sex, marital status,
education, etc. Here the data can be analysed as a whole and by
sub-group, to give a more detailed data set.
• Cluster Sampling: In this method of sampling, a subset of the
sub-groups is chosen at random and the others are then not
taken into account at all. If this subset is still too large, this can
then be divided further through simple random sampling within
each subset.
Non-probability sampling would involve identifying and questioning
individuals with the specific aim of gathering data based on their
individual roles, positions, experience, etc (Jankowicz: 2000) Based on
the differences in the sample, questions may be posed differently, or
different questions may be asked based on the individual being
questioned. Types of non-probability sampling include:
• Accidental (Incidental) Sampling: This involves selecting a
sample from the population in a non systematic manner. This
could be done on the basis of convenience, casual interaction,
which proves to be a valid source of research data. This method
may well result in data which is not representative of the whole
population, and may be biased in some way.
• Purposive Sampling: Specifically selecting a targeted informant
because the researcher finds their input would be valid, or an
important viewpoint to be disclosed that is relevant to the
research. This form of sampling could be done in a number of
ways, such as:
o Key informant technique – People with specialized
knowledge of the issue are selected
o The ‘Slice through the organisation’ technique – Select
people within an organisation, either vertically from top to
bottom, horizontally across the organisation or diagonally
across departments, and functions while traveling down
the chain of command
49
o Snowball sampling – Respondents refer additional
respondents to be interviewed thus creating a ‘snowball’
effect.
• Quota Sampling: This method involves setting sample sizes in
the same ratio within the sample as represented in relative
subgroups of a given population as so as to give a proportionate
sample representation. The downfall of this method is that while
it appears to be proportionate, it does not afford each individual
within the population an equal chance of being selected as part
of the sample.
In cases where the population size is not so large as to be prohibitive to
the researcher, a method of census could also be used, wherein the
entire population is invited to respond to the research questions. This is
typically done by survey questionnaire.
3.5 SAMPLING METHODS USED IN THIS RESEARCH
In the previous section, sampling methods were discussed, detailing the
two primary categories of sampling, and their respective methods. In
this section, this knowledge is made use of to select a suitable sampling
framework for the research to be conducted.
As the primary research method to be used with the first population, the
external stakeholders and role players, is the survey questionnaire, this
introduces a potential problem in the form of managing responses to
the survey questionnaires distributed.
In an effort to minimize the impact of this problem, the researcher will
attempt to distribute survey questionnaires to all the registered
architectural practices in the local area, and will follow up to urge them
to respond, thereby adopting the census method. (the local population
size is approximately 300 – 350 entities) on the understanding that not
all will respond, the researcher realizes that the responses received
may then fall into the class of incidental or convenience sampling. In
50
attempt to prevent potential bias, however, the researcher will aim to
have a representation of a minimum of 10% responses to survey
questionnaires distributed.
The sampling method to be used for the second and third populations,
in the investigation of internal stakeholders in PC Architectural is
Purposive Sampling, making use of individualized semi-structured
interviews with informants to gain data relevant to each respondent’s
view on the issues, and key informant sampling through semi-structured
interviews and focus group sessions with the principals of the practice.
In the case of certain data being gathered for assessment, the
researcher may well make use of blanket census methods, questioning
the whole population. This population is small and manageable, being
under 20 people. This population will be asked questions, using
structured interviews and survey questionnaires.
3.6 DATA COLLECTION METHODS
The manner in which one goes about accumulating research data
would be considered his method of data collection. These methods
essentially fall into two main approaches; observation, and
communication. Observation implies the systematic observation,
recording of and analysis by interpretation of human behaviour. This
approach is useful primarily if the research problem relates to what
people do, or how they do it. Communication implies the obtaining of
research data through some method of questioning through interviews,
surveys, or questionnaires.
Observation methods fall short in the inherent inability, through only
observation, to learn much about the intentions, attitudes, expectations,
or opinions of individuals, while communication is dependent on the
quality and quantity of information that is imparted by respondents, and
may fall short when not attracting the willingness of respondents to
provide crucial or relevant information. It could be argued that
51
observation lends itself better to the quantitative paradigm, and that
communication is more suited to the qualitative paradigm.
In conducting this research, the researcher shall use the following
communication methods:
o Semi-Structured Interviews: Using key questions and themes
as a guide, the researcher shall conduct interviews in an informal
and loosely structured manner, wherein the respondent will be
guided to answer relevant questions which cover the areas
listed. This technique will be used with the interviews to staff
and management within PC Architectural.
o Self-administered Questionnaires: Due to the limitations and
time constraints of the researcher, external role players will be
questioned by self-administered questionnaires, delivered to
respondents by fax, or e-mail.
o Interviewer administered Questionnaires: Internal stakeholders
will, in addition to semi-structured interviews, also be surveyed
by means of questionnaires. The purpose of this is to provide
preliminary data to the researcher for compiling the structures
and themes of the interviews, and also to provide cross-
reference points for verification of the reliability and validity of the
data.
3.6.1 VALIDITY AND RELIABILITY
The essence of reliability is in the repeatability of a method (Shaw et al.
2000: Section 5: 14) This can be established by adopting a method
referred to as the alternative form method, wherein the alternate forms
of the same questions are both given to the same respondent to check
for correlation. Validity implies that the research instrument measures
what it is intended to. The results of a valid measurement is that it will
be able to stand up to alternate methods of measuring with the same
outcome. (Shaw et al. 2000: Section 5: 13,14)
52
With the use of questionnaires, the design and layout of the
questionnaire is critical to the successful responses, which provide the
required and relevant data. This will be discussed in the following
section.
3.7 QUESTIONNAIRE DESIGN
In this research, there are essentially three targeted populations, which
possess different characteristics, thus the questionnaires for each
population shall be structured differently for each. With regard to the
internal stakeholders, the questionnaires will essentially comprise two
sections, the first being closed-ended questions requiring a standard
response based on the Likert Scale. Respondents are asked to provide
a response based on their level of agreement or disagreement with the
statement. Possible responses include:
1 Strongly Agree
2 Agree
3 Neither agree nor disagree (Undecided)
4 Disagree
5 Strongly Disagree
The second section of the questionnaire shall consist of open-ended
questions, which are aimed to elicit additional data as to the reliability of
the answers given in the first section. For example, the question in the
second section could read as follows: Describe the current strategy of
PC Architectural Design as you understand it. Which provides valuable
insight into the individuals perception of the firm’s strategy, in relation to
a possible question in the first section (Based on the Likert Scale)
Would you agree with the statement - PC Architectural has a clearly
stated strategy.
The second population, comprised of external role players, architects in
the local industry, shall have a questionnaire which is largely more
open-ended, and which is aimed at evoking discussion and opinion on
the subjects being asked about.
53
The questionnaire shall be structured to comprise a data gathering
section to place the respondent and his/her organisation in context
within the industry. This shall include such questions as Entity type,
Number of Principals, Number of staff, years in practice. The second
subset of questions are aimed at opening discussion with the
respondent on such subjects as organisational structure, culture, policy,
strategy, and Black Economic empowerment. The purpose of this
questionnaire is to place our case in context with relation to the industry
in which it competes.
The data gathered is primary data, as it consists of empirical work being
done to gain insight into the people who are being questioned, and their
organisations, motivation, and direction. The reading conducted in the
Literature Review in chapter two comprised secondary research into the
subjects as discussed and assisted in putting this research into context
in terms of its relevance to PC Architectural Design and the industry in
which it operates.
3.8 SUMMARY
In this chapter, the research methodology being employed in this
research has been discussed. Due to the qualitative nature of the
research problem, the researcher has elected to follow the inductive,
qualitative paradigm, which was discussed at length as to its related
methods. The methodology that has been adopted has been the case
study method, studying PC Architectural Design as a specific case in its
context, both internally, and how the practice relates to external role
players in the industry.
The researcher has identified three populations, namely; Internal
stakeholders, the management and staff of the practice, and external
role players, other architects in the local industry, who operate in the
same competitive environment. Of these populations, the sampling
methods selected by the researcher are a census approach with regard
to internal management and staff, primarily due to the small population
54
size (under 20 people) the data gathering will be conducted sing the
communication method, with a combination of survey questionnaires
and semi-structured interviews.
In attempting to counter the possibility of poor responses from the
external role players, the researcher has elected to send out self
administered questionnaires to all local architects, allowing all architects
equal chance to respond, and then accepting that as control over the
responses has in essence been forfeited, aim to elicit a response in the
region of 10% of those sent out. This would then essentially relate to
accidental or incidental sampling, as the researcher will have little
choice but to accept those questionnaires, which have been returned.
In addition to these questionnaires, the researcher has been afforded
the opportunity to conduct person-to-person interviews with a select
number of these respondents, by their invitation, and shall thus conduct
three key informant interviews with architects to gain further insight. The
format of the interview will be largely semi-structured.
As the three populations are understood by the researcher to be well
educated and have an acceptable literacy level, and as the populations
are very specific, the researcher has not placed heavy weighting on
such activities as piloting extensively, preferring a method of refining
through additional interviews or questionnaires.
The results of this research will be presented and discussed in chapter
four.
55
CHAPTER 4
RESULTS AND FINDINGS
4.1 INTRODUCTION
In chapter three, the research methodology, research instruments,
population, sampling methods, and data gathering techniques
employed in this research were discussed. This chapter presents and
analyses the data gathered by the research instruments used by the
researcher, as outlined in chapter three. The results are presented in
this chapter in progression of population, from the first population;
architects in local business, followed by the second population; the
employees of PC Architectural Design, and the third population, being
the principals of the firm. These results will be analysed, and discussed
within their own context.
4.2 RESULTS AND ANALYSIS
In this section, the results of the data gathered through the techniques
and methodologies discussed in chapter three are presented and
analysed. These will be presented individually and each body of data
gathered will be divided into themes, relevant to that population, which
shall give insight into and aim to realize the objectives of the research
as stated in section 1.3 above.
4.2.1 POPULATION ONE – ARCHITECTS
The data gathered from the first population, was collected by way of a
survey questionnaire. The sampling method used was incidental
sampling, as respondent activity was not under the immediate control of
the researcher. In total 133 surveys were sent to architects within the
local architectural industry, with the stated objective of having a
response rate of 5% to 10% of the population communicated with.
Nineteen respondents completed their questionnaires and returned
them in time for analysis. This translates to a response rate of 14.3%,
which is in excess of the rate anticipated. The questionnaire was
56
divided into five themes, namely; Respondent Attributes, Organisational
Structure and Culture, BEE Position and Strategy, Industry Skills
Assessment, and Strategy, Strategic Planning, and the Changing
Architectural Industry. The first theme was comprised of direct data
gathering questions requiring closed ended responses, while the
balance of the themes were covered by way of open-ended questions
in an attempt by the researcher of engaging the respondent in
discussion on the theme.
4.2.1.1 ARCHITECTURAL RESPONDENT ATTRIBUTES
As the purpose of conducting research into architectural practices in the
local market was to gather relevant insight into the organisational
structures, cultures, attitudes, and administrative and strategic position
of these external role players in the industry. This theme was deemed
pertinent as part of the data gathered about respondents in order to
analyse trends and correlations with respect to the qualitative elements
of the research.
The charts discussed below are based on the data Table 1 and table 2
in the Appendices at the end of this dissertation.
Respondent Entity Segmentation
26%
5%
43%
26%
Sole Prop
Partner
CC
PTY LTD
Figure 4.1: Respondent Entity Segmentation
Source: Q1 as per questionnaire refer to Annexure D and as per
Table 2 in Annexure B.
57
The chart in figure 4.1 above indicates graphically the breakdown of
feedback submitted by respondents in terms of their business entity.
This data shall be expanded on further in an attempt to assess if there
are specific correlations within and between entity types.
0
50
100
150
200
250
Sole Prop Partner CC PTY LTD
No Principals by entity
type
No staff by entity type
Figure 4.2: Number of Principals and Staff per Entity Type
Source: Q1, Q2, Q3 as per questionnaire see Annexure D and as
per Table 2 in Annexure B.
The chart in figure 4.2 above represents the number of principals in
each segment, based on the responses. In addition to this the chart
illustrates the number of staff employed in each segment, and thus the
relationship between the two.
In terms of Strogoff’s (2004) stages of growth model, as discussed in
chapter 2.2 above, the entity types formed by the principals closely
match the stages of this model, in the role of principals and the size and
stability of the practices. As evidenced, the principals in the smaller
entities, musty play a pivotal operational role in the activities of the
practice, while in the private companies, the principals have a more
executive role, with operational areas manned by employees. This is
further supported by the data contained in table 2 (Annexure B) which
relates to the industry sectors on which the different entities focus, with
the more formal, larger entities being focused on commercial, industrial
and government contracts, while the less formal, smaller practices
58
gravitate toward predominantly residential contracts, with a small
interest in commercial or specialised sectors of industry.
Figure 4.3 below reflects the average turnover per person in each entity
segment. This is calculated by dividing the total turnover generated in
each entity segment, by the total number of principals and staff in that
entity segment. This does not take into account the use of outsourced
services, and does not imply profitability, however it does represent a
significant difference between the average turnover generated per
capita in each segment, with sole proprietors clearly being more
focused on the correlation between the activity of the individual and the
entity income.
Average Turnover per person in segment
0.00
200000.00
400000.00
600000.00
800000.00
1000000.00
1200000.00
1400000.00
Sole
Prop
Partner CC PTY LTD
Average Turnover per
person in segment
Figure 4.3: Average Turnover per person in each Entity Segment
Source: Q1, Q2, Q3, Q4 as per questionnaire see Annexure D and
as per Table 2 in Annexure B.
It could be argued that as sole proprietors are closer to the “cold face”
dealing directly on all lines, including client liaison, technical delivery,
consultation, billing and collections, and can directly relate their
production to their own well-being, their individual average income
generated would be significantly higher than the average income
generated by an employee in a private company who is tasked with
59
some internal function, in which he cannot see a correlation between
his daily activities, and either his personal income, or the company
turnover.
The data in figure 4.4 below relates to the average level of experience
of the principals in each entity segment. This is measured in years, and
is calculated by simple average as used in the above figures.
This chart provides insight into the conscious choice of many sole
proprietors to remain in the stage Strogoff (2004) refers to as the
infancy stage.
Average experience per principal in segment (years)
0
2
4
6
8
10
12
Sole Prop Partner CC PTY LTD
Average experienceper principal insegment (years)
Figure 4.4: Average Experience per person in Entity Segment
Source: Q1, Q2, Q3, Q4 as per questionnaire see Annexure D and
as per Table 2 in Annexure B.
In assessing the four charts above, the researcher has arrived at the
following findings based on the attributes of these entities;
• Entity type is not necessarily a determinant in the turnover
potential of the practice, however it would appear that the entity
type definitely has a direct correlation with the turnover-related
productivity of the individual
60
• The entities as indicated in the segmentation chart (Figure 4.1)
possess attributes that can be closely matched with the growth
stages of a design business as put forward by Strogoff (2004).
This may provide the researcher with valuable insight into the
strategic thinking, organisational structures and cultures
employed by the respondents
• The level of experience of principals in the less formal entity
types illustrates that there does exist a conscious effort on the
part of these practices to remain small, and that expansion is not
necessarily a strategic aim, preferring instead to have close
control and remain small
• There appears to be a distinct difference in the efficiency levels
of individuals in larger practices as compared with those in
smaller entities.
Based on the results above, the entity types may appear to drive
operational and strategic thinking, as well as possibly having a
significant impact on the structure and culture of the practice, the other
themes below will be presented by entity type in order to determine if
further trends exist based on entity type.
4.2.1.2 ORGANISATIONAL STRUCTURES AND CULTURES
As determined in the literature review, the structure and culture of an
organisation are mutually interrelated. As such, the questions under this
sub-heading provide insight into both elements. This sub-section refers
to data gathered and tabulated as per questions 7, 8, 9, and 10 of the
Architects Survey Questionnaire. See Annexure D, and also Table 1 in
Annexure A for a tabular breakdown of the respondents in each entity.
4.2.1.2.1 The structures and cultures of Sole Proprietor and
Partnership based Architectural Practices
The respondents in this segment demonstrated very simplistic
organisational structures, comprising largely one or two person
structures, with a strong reliance on external resources and networks.
61
This structure would be represented schematically as much like figure
2.1 in chapter 2. These respondents perceive their structure to be
dynamic rather than fixed, and attribute this largely to being able to
supplement through external resources. The internal structure, which is
to say, full time personnel and principals appears to be fixed, as none of
the respondents appear to have a tangible plan, nor a specific intention
of expanding their immediate internal structure.
All respondents in this category state that their decision making is
centralized, and attribute this primarily to the simplicity and size of their
practices, not requiring any decentralised decision-making, or allowing
limited decision-making in non-critical areas, within narrow parameters.
4.2.1.2.2 The structures and cultures of Close Corporation
based Architectural Practices
The respondents in this segment exhibit a wider variation of
organisational structure, however, based on the diagrammatic feedback
given to Question 7, it is apparent that the respondents appear to have
put more thought into their structures, and appear to have adopted
generally more formal structures, somewhat indicative of a greatly
simplified representation of the functional organisational structure as
depicted in figure 2.2 of chapter 2. The formation and delegation of
specific functions is seen as present in these structures. Again,
outsourcing or networking with external professionals is prevalent in the
organisational structure.
The structure is perceived as being flexible based on workload, with the
utilization of external or temporary personnel as the need dictates. It is
noted that the question relates to differentiating between fixed and
dynamic, however the responses describe flexibility in answer to this
question, illustrating an openness to consider expansion, but not a
commitment. Decision-making is centralised with 100% of the
respondents in this segment concurring. The reasons for maintaining
62
centralised decision making are stated as being either due to the small
size of the practice, or due to unwillingness to give up too much control.
These respondents appear to be hesitant of expansion and site similar
reasons for this, including concerns about the consistency of projects,
the unreliable nature of project work, and difficulty in acquiring and
retaining qualified and competent staff. Considerations that the labour
law is prohibitive to expansion, were also shared sentiments.
4.2.1.2.3 The structures and cultures of Private Company
based Architectural Practices
In this segment, there exists the widest deviation in organisational size
and structure with the smallest practice being 11 people, and the
largest being 134 people including principals. The organisational
structures appeared to be diverse, ranging in description from network
structures, which appeared to be team oriented, to functional structures,
to matrix structures, however, there does appear to be a clearly defined
hierarchy within these organisations. These organisations express
themselves as being dynamic, with the structures capable of being
changed, subject to ensuring a clear hierarchy, and with the structure
being driven by workload, and organised as teams based on the project
requirements.
Decision making appears to be more decentralised, but only on
operational level decisions, with all key decision-making being kept
central, however, unlike the previous segments, this is driven out of a
recognition of limitation and management of risk and liability. At this
level the principals have a greater understanding of the implications of
certain key decisions.
Most respondents state that they are satisfied with the size of their
organisations, but state that the obstacle to expansion is the shortage
of skilled and experienced staff.
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4.2.1.3 BEE POSITIONS AND STRATEGIES
The literature review in chapter 2 highlighted the importance of
understanding government policy regarding broad based economic
empowerment, and adopting a strategy which would incorporate this
policy in future planning. This section analyses the BEE position and
strategy of architects in the local industry to determine the extent to
which the role players in the industry consider BEE a factor.This sub-
section refers to data gathered and tabulated as per questions 11 and
12 of the Architects Survey Questionnaire. See Annexure D, and also
Table 1 in Annexure A for a tabular breakdown of the respondents in
each entity.
4.2.1.3.1 The BEE position of Sole Proprietors and Partnerships in
Architecture
The respondents in this segment of the industry admit largely to not
being completely conversant with BEE policy, yet have formed the
position that such policy does not affect their business. This may be
primarily due to the market that this segment predominantly deals with,
namely; the residential market, thus they do not see the necessity for
looking into BEE policy any further. With reference to having and
applying a BEE strategy, only one respondent (Partnership) stated they
had a strategy, while the balance (all sole proprietors) simply stated that
they did not.
4.2.1.3.2 The BEE position of Close Corporations in Architecture
In response to the BEE questions, the respondents in this segment
indicated familiarity with BEE policy and, and a number of respondents
recognised that BEE could have or has had an impact on some portion
of their business. In spite of this, no real BEE strategy has been
delineated by any of these practices. The extent of exposure to BEE in
this segment seems to be on the level of hearsay and discussion of the
subject, and a possible apathy based on unqualified opinion. It would
appear though, that BEE is still not enough of an obstacle to the
livelihood of this segment of the industry to warrant any sense of
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urgency in incorporating a BEE plan into their strategic thinking. It
appears that the consensus among these respondents is that BEE
involves selling or ‘giving away’ equity in the business to someone
whose qualifications, experience or loyalty may be in question. This
may introduce an element of risk which acts as the ‘bigger stick’ than
the threat of lost business by not being BEE compliant.
4.2.1.3.3 The BEE position of Private Companies in Architecture
Unlike the previous two segments, respondents in this segment appear
to have adopted the perspective that BEE minimally deserves due
consideration. Of the respondents, All appear to have considered the
possible impact that BEE policy may have on their business, and with
the exception of one practice, which has adopted a “wait and see”
approach, the balance have either implemented a BEE strategy or are
in the process of implementing one. A number of these respondents
have however stated that in implementing their BEE strategy, they have
encountered confusion and difficulties in implementing their strategy,
and raise the point of not being able to readily source skilled BEE
stakeholders to integrate successfully into their business in such a way
as to add real value.
4.2.1.4 ARCHITECTURAL INDUSTRY SKILLS ASSESSMENT
The responses to this question (Question 15 Annexure D) were largely
common across all segments and are not specific to entity type,
indicating that this situation is created external to these practices, and
that the practices are merely a point of observation and feedback in
providing this data to the researcher
The motivation behind asking this question was twofold, firstly, to find
out if the statement by the Construction Education and Training
Authority – that the quality of Architectural Training within the current
curriculum is of acceptable quality, and secondly, to determine what
training program, if any, would be of the greatest benefit in providing the
65
industry with human resources who would make valuable human assets
to the organisation.
In response to this question, the most common response related to the
concept of providing practical training in administering and managing a
business as a commercial activity, including all the relevant sub-fields
within this framework, including Human Resources, Risk Management,
Fee Negotiation, Financial Management, Project Management. In
addition to this the technical quality of the training was perceived to be
lacking. Suggestions were made that training incorporate practical
hands-on exposure to the technical aspects of construction.
4.2.1.5 STRATEGIC POSITION AND THE CHANGING INDUSTRY
As the research relates specifically to the answering of a research
problem, data considering current strategic position and thinking in the
industry should be analysed. This sub-section refers to data gathered
and tabulated as per questions 13, 14, and 16 of the Architects Survey
Questionnaire. See Annexure D, and also Table 1 in Annexure A for a
tabular breakdown of the respondents in each entity
4.2.1.5.1 The Strategic Position and nature of change in the
industry as perceived by Sole Proprietors and
Partnerships in Architecture
The respondents in this entity segment tend to concur quite readily as
to the key strategic differentiator at this level, which is specifically
related to the level of experience they have, the dedication to the clients
project and finally the personal service and attention to detail. With
regard to expansion plans, these respondents have either not planned
for any sequential progressive expansion, apparently due to time
constraints, or have specifically stated an strategic intention to not
expand their practice. Sentiments regarding the changing nature of the
industry appear to be split into two primary schools of thought, one
perceiving that technology and the streamlining of technologies is the
key driver of change in the industry, and that information technology
66
must be invested in to minimize the impact of these changes. The other
school of thought is somewhat negative, stating that the standards of
the industry are being lowered with unskilled, unqualified and
irresponsible stakeholders affecting the industry in a negative way.
4.2.1.5.2 The Strategic Position and nature of change in the
industry as perceived by Close Corporations in
Architecture
The key themes of respondents in this segment related to their strategic
differentiator include primarily the personal attention, with a specific
accent on the professional quality, integrity and uniqueness of design
work, as well as fast service and efficiency and cost effectiveness. With
regard to the strategic plans of these practices, these are not disclosed
by any respondents, however the biggest barrier to expansion for these
practices appears to be funding to expand to the next step. The next
step is not mentioned, indicating that these individuals have possibly
resigned themselves to the fact that nothing can be done to overcome
their strategic barrier, and have not developed their plan any further.
The future for this segment of the industry holds change in the form of
faster technologies, and increased emphasis on technology, such that
investment in technology and software is a serious consideration for
many respondents.
4.2.1.5.3 The Strategic Position and nature of change in the
industry as perceived by Private Companies in
Architecture
The respondents in this sector have a widely differentiated response to
question 13, with no company echoing the differentiator of any other
practices. These differentiators included:
• Being a black company with experience and strengths
• Ability to cost-engineer buildings,
• Passion for what we do, Healthy and vibrant internal culture
• Diverse - have a backbone of mining projects result in stability
• Believe quality of our product is superior
• Our attitude and ability
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The respondents do not mention any serious obstacles to strategic
implementation, beyond such issues as the loss of staff due to
emigration, or the selection of key staff. These organisations appear to
have a strategic plan in place and are confidently working toward it’s
attainment. With regard to future trends and the changing
environment, these respondents recognise technology as a factor, but
appear to perceive it fro a different perspective, such as the harnessing
of technology to work on projects from a remote location, or
cooperatively with professionals across long distances, or speed of
technology enabling the value proposition of architects to be sold
differently. The response from the biggest practice in this segment
indicated that clients are becoming more demanding and less
reasonable and are exhibiting a real willingness to sue professionals if
their deliverables are not met.
4.2.2 POPULATION 2 – PC ARCHITECTURAL DESIGN STAFF
The data gathered from the second population, was collected by way of
an interviewer conducted survey questionnaire. Due to the small size of
this population, the sampling method used was a complete census
method. The researcher conducted the questionnaire with each
respondent individually, and all but three staff were interviewed. These
staff were not available. The questionnaire was divided into two
sections, with the first section being comprised of closed-ended
questions based on ratings based on a Lickert Scale as discussed in
Chapter 2. The second set of questions were open-ended questions
aimed at elaborative discussion which would further assess the
reliability and validity of the research. The content of the open-ended
questions was further tabulated by content for commonalities reflecting
the validity of the staff’s perceptions as a whole.
The results of questionnaire will be discussed next, with the results of
the first section given by question, and with comments by the
researcher expressing views or input gathered in the second section,
which have an impact on the data reported in the first section.
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4.2.2.1 PC ARCHITECTURAL DESIGN STAFF SURVEY RESULTS
The results referred to in this section are reflected in Questions 1 – 14
of the Staff Questionnaire, as per the sample in Annexure E, and based
on the data reflected in the Table entitled “Closed Ended Questions
Frequency Tabulation” in Annexure F. These responses have been
provided on a Lickert Scale system, based on the following key:
1 I strongly agree 2 I agree 3 I neither agree nor disagree 4 I disagree 5 I strongly disagree
All respondents completed the questionnaire in full, thus all
questionnaires have been included in these results.
Figure 4.5: PC Architectural Design Staff Survey Responses
Source: Research conducted by researcher
STATEMENT
Rating 1
Rating 2
Rating 3
Rating 4
Rating 5
1. PC Arch has a clear business strategy
50.0% 41.66% 8.33% 0% 0%
2. I know and understand the company strategy
25% 50% 0% 16.66% 8.33%
3. Can see how I fit into the company strategy
41.66% 58.33% 0% 0% 0%
4. PC Arch is a typical architectural practice
16.66% 16.66% 8.33% 50% 8.33%
5. Can clearly see my role in future of the company
50% 25% 25% 0% 0%
6. Management is transparent about their plans
58.33% 25% 16.66% 0% 0%
7. The company is doing well at present
8.33% 41.66% 16.66% 25% 8.33%
8. The company is achieving its goals
0% 41.66% 33.33% 25% 0%
9. I have my own clear goals
66.66% 33.33% 0% 0% 0%
10. Can achieve my goals by working in the company.
58.33% 25% 16.66% 0% 0%
11. Our clients get excellent service
33.33% 50% 16.66% 0% 0%
12. Our fee is too high
0% 0% 33.33% 16.66% 50%
13. Staff need to be strictly & closely managed
0% 41.66% 33.33% 25% 0%
14. Other staff know their jobs well and can do them
16.66% 50% 33.33% 0% 0%
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From the results in table 4.4 above it can be observed that the staff are
generally content with the practice management, are reasonably
confident of the stability of the firm, and feel they both understand the
strategy of the firm and can conceive of their role within this strategy.
The use of cross-correlation between these questions has highlighted a
validity issue with regard to questions 1, 2, and 3, in that it was noted
that while 91.66% of staff agree that PC Architectural Design has a
clear strategy, only 75% agree that they know and understand this
strategy. While this could be valid in staff adopting the view that the
company has a strategy by hearing that one exists and by induction
from pieces of data received and processed. This conflicts with the
response to question 3 wherein 100% of the staff state they agree that
they can see how they fit into the strategy, while 25% accept they do
not know or understand the strategy.
The company understanding of the strategy as expressed in section
two of the questionnaire (See table in Annexure F) is largely split in two.
With 50% of the respondents understanding the strategy to be ‘To have
highly trained employees delivering high quality service to clients
satisfaction, thereby expanding the company’ while 33.33% of the
respondents understood the strategy to be ‘Developing a strategy
whereby field agents can be placed throughout SA, thus creating job
opportunities and internal promotions for staff to management’. While
these strategies may appear to be different, more insight may be
gained as to how these strategies can exist concurrently within the
practice, by reading the results discussed in section 4.2.3 below.
Staff sentiment about the company appears to be high, with general
agreement that the company service levels are excellent, pricing is fair,
and the staff know their jobs and can do them. This could be
attributable to the feeling expressed by staff in the second section
under question 16 (See Annexure F) which relates to what makes PC
Architectural Design different, wherein the sentiment of 58.33% of the
staff is that the company operates as a team, create a casual relaxed
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work environment, with good communication. The transparent
remuneration structure allows for excellent income opportunities for
high producing employees, which is all enhanced by the unique in-
house training facility. This sentiment is echoed in the feedback about
the management style of the firm in which 33.3% of the respondents
mentioned the friendly open management style, and the interest of
management in all levels of the organisation (33.3%) as attributes of the
management style, which they perceive to be beneficial.
An interesting observation is that all staff surveyed felt they had clear
personal goals, yet in the open-ended questions, only 33.3% of the
respondents had clearly stated goals, which were thought through and
are attainable, in which the practice plays a role in the attainment of the
goal. 25% of the respondents indicated goals, which would effectively
require leaving the firm in order to pursue the goal, and perceive the
practice as being a vehicle to provide either the resources needed at
present, or the experience necessary to attain their personal goals.
4.2.3 POPULATION THREE – THE PRINCIPALS OF PC
ARCHITECTURAL DESIGN
This population, comprising three principals of the practice, were
interviewed using key informant interview techniques, with semi-
structured interview formats being followed in semi-conversational
individual interviews. The results are presented individually below.
4.2.3.1 INTERVIEW – GENERAL MANAGER - ADMINISTRATION
The aim of this interview was to establish the role of the GM-Admin,
discover her view of the company strategy, and its implementation, and
obtain any additional data about the organisation.
From the interview, the researcher ascertained that the General
Manager-Admin has been a member and General Manager of the
practice for 11 months. She was first contracted to implement and run a
program, which was aimed at forming strategic partnership alliances
71
with synergistic entities within the construction industry. As the wife of
the General Manager, she had exposure to the firm for some time, and
on working within the firm for some weeks, expressed an interest in
taking on a more active leadership role in the practice. Her experience
is in sales and marketing and client relationship management made her
well suited to the position.
Her ownership position in the practice is as a member of the Close
Corporation with a 20% members interest, which, despite being married
to the member who sold her this interest, was acquired for a fee of
R100,000.00. She believes the present day value of her stake in the
business would be in the region of R300,000.00.
Since becoming a member of the practice, the GM-Admin has managed
the executive division, the personnel and communications division, the
sales and marketing division, and the finance and admin division.
In terms of the strategic plan for the business the GM-Admin provided
insight into the broader strategy, which is essentially to expand
geographically through establishing a central training and co-ordination
facility for new franchisees or agents. The infrastructure would have to
be put in place to facilitate this broad based strategy, which would take
the existing core business into account as a key component in this
strategy. Within this context Black Economic Empowerment policy was
discussed as being relevant to the strategy, however very little
understanding of this policy existed, beyond the idea that the business
should structure the strategy to ensure the model is value-rich in terms
of the BEE charter, which would make it attractive in terms of the
principals exercising an exit strategy at some future point. The
possibility that a future buyer would see great value in the practices
empowerment status cannot be overlooked.
While this goal was openly discussed, the interviewee did express
uncertainty as to the reality or time-scale of the strategy she detailed,
and admitted that the strategy has been discussed, and ideas put
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forward, but is still very embryonic, and as she understood it, this
interview was relevant to the development of this strategy.
4.2.3.2 INTERVIEW – GENERAL MANAGER - OPERATIONS
The aim of this interview was to establish the role of the GM
Operations, discover his understanding of the company strategy, and its
implementation, and obtain any additional data about the organisation
from his perspective.
From the interview, the researcher ascertained that the General
Manager operations has been a member and General Manager of the
practice for 12 months, and moved to the practice three months before
buying in to the business. His experience is in drawing office
management, and as such is well suited to the position he now holds.
His ownership position in the practice is as a member of the Close
Corporation with a 20% members interest, which was acquired for a fee
of R100,000.00. he is confident the present day value of his stake in the
business would be in the region of R400,000.00 to R500,000.00.
As the practice was in existence before buying into it, the interviewee
was asked his reasons for deciding to become a member of the firm.
His responses were that he liked the high ethical level of the other
members at the time, could see the potential of the business and was
willing to take responsibility for an active role in directing the company
toward attaining its goals. He is confident that these values are still
inherent in the culture, structure and strategy of the business, today,
and that the principals have made great strides toward the stated goals,
and if anything have revised the goals to be bigger, yet more attainable.
In terms of the strategic plan for the business the GM Operations
recognises the current strategy within the core operation, as being the
attainment of and stable maintenance of turnover in the region of
R400,000 to R500,000 per month, in order to allow the principals the
cash flows and resources needed to re-structure & diversify the
73
business. Black Economic Empowerment policy is stated as being
relevant to the strategic plans of the practice, yet on enquiring further
into this, the envisaged impact involves the promotion of black staff to
higher positions within the company, training them to become effective
managers, and operate within the business, which the GM-Operations
perceives will have a tremendous impact. The researcher found it
difficult to relate this statement to the stated strategy of the business,
and thus questions the integrity of employing this as part of the strategy
unless it forms part of the strategy which was not clarified by the GM-
operations.
The confidence in the business, as expressed is attributed to the unique
business strategy of the principals, the effective management
technology and systems of the practice and the apparent ability of the
principals to develop a strategy by looking at the industry without
blinkers on, gaining a broader perspective, and then see opportunities
which competitors would not see.
The biggest barrier, which was expressed as more of a hindrance than
a barrier, is the training of personnel, and gaining the willingness of
employees to buy in to the strategy, and foster loyalty to the practice.
4.2.3.3 INTERVIEW – GENERAL MANAGER (MANAGING
MEMBER)
The general Manager (GM) has been a member of the close
corporation since its inception in 2002, and was a 50% partner in the
partnership, from which PC Architectural Design derived.. He has
defined the strategic and administrative structure of the business since
forming a partnership with his brother in 2001.
He currently holds a members interest of 60% in the practice, having
bought out his brother in 2004, and having allowed two other members
to buy into the practice in late 2004. He possess a strong desire to
74
establish standardisation within the business, and has worked toward
this end, accomplishing a great deal in this area. The question was
raised about how such different strategic views can be expressed by
key management and staff, as discussed in the previous sub-sections,
and also as observed in the questionnaire responses by staff of the
practice.
To clarify, the GM explained that both strategies were valid, and being
evolved at present. The strategy to develop the existing core business
as a model practice is key in terms of providing a sounding board for
testing systems and as a model pilot environment for implementation
and standardisation, which would inevitably be required in the
implementation of the broader strategy. He did, however state that the
broader strategy was very much still in the R&D stages, and as such
the strategy has not been broadly communicated within the
organisation. Regarding BEE, the position of the practice was that
government was a key external stakeholder in the practice in the
medium to long term, and thus BEE and the Skills Development act
would need to be clearly understood to ensure their appropriate and
beneficial implementation, and to explore the possible benefits to be
had from complying with the Skills Development act.
The major key differentiator of the business is the broad use of
performance based pay, using a system of commissions paid to all
staff, except admin and internal personnel, and including the principals
on a transparent scale, thereby ensuring that high-level producers are
well remunerated, and non-producers leave in short order. The GM by
way of an internal ballot asking commission earners to vote to retain the
commission only structure, or adopt a salary with commission, recently
tested this system. The results were unanimously for retaining the
commission only structure. The system has not always been popular,
the GM recounted a story of when he introduced the system in 2002, he
had 2 staff resign in quick succession, and one staff member attempt to
stage a “walk in” to demand a softer remuneration system. It appears
75
that the system has now become integral to the make-up of the
organisation and its culture.
This section has detailed the results found on analyzing the responses
to the research questions, and interviews conducted of the identified
populations and samples. The findings based on these results are
discussed in section 4.3 and its respective sub-sections below.
4.3 RESEARCH FINDINGS
The results presented in section 4.2 above, provided valuable insight
into the research. The findings, based on both the primary and
secondary research shall be presented in this section, and concluding
with the primary research problem being answered by the consolidated
findings.
4.3.1 STRUCTURE, CULTURE, AND STRATEGIC POSITION
In studying the results of the research reported in section 4.2.1 above,
the following findings were made about the structure and culture of the
researched organisations;
In aligning these results with Strogoff (2004), it is apparent that the sole
proprietors are in the infancy stage, and possibly in the concentration
stage. (As discussed in section 2.2.1 of chapter 2 above) This
organisation’s culture is driven directly and strongly by the explicit
determinism of it’s principals, thus these entities would be seen to
possess a strong power culture (Harrison, in Handy, 1993: 181)
The close corporations surveyed appear to have the development of
their business as their aim, but do not appear to be stable, as their key
fears rotate around uncertainty of obtaining future work. Thus, these
entities would likely be operating between the concentration and
momentum stages, and based on their unwillingness to relinquish
control in decision making, the prevailing culture could be seen to be a
role culture within these organisations.
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The Private Companies in this research, appear to have attained a
certain level of stability, and cite such barriers as insufficient
experience, and management of liability. These organisations are
clearly more mature, and stable, and could readily be observed to be
operating largely in the stability or mastery stage of strogoff’s (2004)
model. Here the organisational designs, and hierarchy tend to illustrate
the history of the role culture, with the task culture recognised by some
as being a key element to realization of maturity in the business
The different entity types illustrated in their survey responses that there
were traits in terms of their thinking, concerns and willingness or
unwillingness to explore expansion as a strategically planned activity,
which were similar and tended to align further with Strogoff’s (2004)
stages of growth model. There appear to be external forces which are
stated as having a profound impact on the strategic position of certain
of the entities, however, these forces are not insurmountable, and it is
the view of the researcher that these external forces only serve to act
as motivation to justify the strategic position of the principal.
While there appears to be a direct relationship between the entity type
selected and the structure, culture and strategic intent of a practice,
there is nothing preventing a practice from expanding a sole proprietor
to a state of mastery, or enforcing expansion and strategic thinking on a
private company. The structure, culture and strategic position of the
business appears to be directly related to the perspective and position
of the principals, and the entity type is merely selected as an
appropriate business vehicle for attaining his or her specific business
goals.
As Strogoff (2004) details specific stages in growth, and as Miller
(1993) illustrates the two operational strategies for expanding a
business regardless of where the organisation is in its growth cycle, and
as the findings and results support, and align with these previous
writings, the researcher has found that the structure and culture can
77
and indeed will change as a new strategic direction is selected, and that
in identifying the stage (or growth paradigm) of the practice within
Strogoff’s model, and the exact stage of the organisation within the
paradigm in which they find themselves, a specific strategy would need
to be fashioned to enable the business to develop into. In this respect,
perceived limitations are manifestations which can be used by
principals as indicators (sometimes bright flashing lights) to confirm for
the principal, what stage his practice is in, and indeed at what stage
within that paradigm his practice is operating.
Based on the interviews conducted with the principals of the practice,
the researcher has made the following finding relevant to the firm’s
current strategic position; The practice exhibits characteristics
associated with Strogoff’s (2004) Momentum stage, in that there has
been a move to promote the completed projects of the firm, the
company is becoming a recognised name, and the marketing programs
of the firm involve more visibility, and synergies. The firm is currently a
Close Corporation, which, based on the industry survey responses,
matches this stage. In terms of structure and culture, the firm has a
functions-type organisational structure and exhibits characteristics
inherent of a role culture, both again correlating with the Momentum
stage.
4.3.2 THE RELEVANCE AND IMPACT OF BLACK ECONOMIC
EMPOWERMENT ON THE INDUSTRY AND PC ARCHITECTURAL
DESIGN
Based on primary research into the Architects within the local industry,
the research results indicate a clear picture, which appears to be very
specifically related to the entity segments as represented. The findings
are reported as follows:
From the responses it is apparent that a direct relationship exists
between the type of entity one has established, the sector of the market
in which the practice finds itself operating, and the level of relevance
associated with BEE policy. This could be due to the market sectors
toward which these entities tend to gravitate, or the level of strategic
78
complexity the principals are prepared to include in their strategic
planning.
The majority of all respondents do not have a BEE strategy, and many
perceive BEE as being largely irrelevant to their business success. The
researcher has found that these entities have not conducted sufficient
research into BEE, and the Skills Development Act, and thus are not
able to develop strategy which incorporates BEE and a valid skills
development plan within their business, despite the finding that the
architect survey feedback, showed the key finding pertaining to skills
development was that current training curricula are flawed, and do not
meet the expectations of the industry. This is echoed by the numerous
other responses, to other questions, which refer to the shortage of
skilled personnel
4.3.3 FRANCHISING AND PC ARCHITECTURAL DESIGN
The secondary research into franchising (used as a generic term) or
similar distribution structures, illustrated that provided a business’
processes could be standardized, and fully documented, and provided
the size of the market was big enough, a franchising model (or similar)
could be a viable distribution model. The primary research into the
industry found that no such model exists, at least within the
respondents, however, what was found in analyzing the responses , as
illustrated in figure 4.3 above, that the sole proprietor segment
illustrated significantly higher turnover per individual than any other
segment of respondents. This illustrates that as the sole proprietor who
is directly accountable for the success of his practice, a direct
correlation between his actions and his income is realized. This does
not appear to be the case in the other extreme of private companies,
wherein it could be argued, very few staff can or do directly relate their
actions, to either the company turnover, or their own remuneration.
Based on the performance based rewards system employed by PC
Architectural Design, the staff appear more in communication with the
79
organisation and it’s workings. This leads the researcher to find that
although all discontinuous and revolutionary change is disruptive, the
idea of re-engineering this business would not cause great concern to
staff of the organisation.
4.4 THE RESEARCH PROBLEM ANSWERED
As discussed in chapter 1.3 above, the primary research problem was
to determine if the traditionally nuclear or cluster type organization of an
architectural design practice can be re-engineered to create a strong
and stable organization, which will lend itself to an agency or
franchising model, while not compromising design quality, technical
integrity, and commercial viability for all stakeholders.
Based on the research findings detailed above, the researcher has
found that the organisation could readily be re-engineered to lend itself
to this model, and that both primary and secondary research illustrates
that, while this does not appear to have been done before, this model
could enable the practice to expand strategically while maintaining
much higher efficiencies than other “traditional” large or growing
architectural practices, through the maintenance of the sole proprietors
action – income correlation, which would remain intact with a franchise
model.
The researcher has also found that the theory that architectural
practices typically adopt a nuclear organisational model, is limited to a
specific segment of the industry, and does not really warrant the term
‘typical’. Strogoff’s (2004) stages of growth model, as cross-related with
organisation structures, prevalent cultures reflective of each stage, and
the strategic action that being in each stage (as discussed in chapter 2)
would necessitate, does provide a broader view on the subject of
organisational structures, and the appropriate strategic construct
specific to that organisations situation, while at the same time verifying
that many architectural practices tend to remain in the infancy stage of
growth, in which the entrepreneurial structure would apply. This
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structure personifies the ‘nuclear’ structure referred to by the
researcher.
In this chapter, the results and findings of the research were presented,
including the researchers conclusion as to how the research has
answered the research question. This research has yet to be evaluated
in context with the literature review undertaken in chapter 2. This is
discussed in chapter five.
81
CHAPTER FIVE
DISCUSSION
5.1 INTRODUCTION
In previous chapters the researcher has undertaken a review of
literature in chapter 2 on the themes surrounding the subject,
delineated the research methodologies to be employed, in chapter 3,
and analysed the research and provided the results and findings
relevant to the research question in chapter 4. This chapter provides a
platform for the researcher to relate the results and findings to the
studies reviewed in chapter 2, and to determine how the findings
contribute to the field of knowledge.
5.2 THE FINDINGS IN RELATION TO LITERATURE REVIEWED
In chapter 2 literature was reviewed on a range of subjects, which were
considered by the researcher to be relevant to the research effort.
These studies fell within certain themes and were presented
sequentially. To ensure consistency and ease of reference to chapter
2, the same themes have been repeated hereunder in order to place
the results and findings in context with the literature review.
5.2.1 ORGANISATION STRUCTURE, CULTURE AND
COMPENSATION
The literature review highlighted a distinct relationship between the
structure and culture of an organisation, and the researcher
demonstrated the applicability of certain structures and cultures in
relation to the Stages of growth in a Design Business Model as
presented by Strogoff (2004), which document placed the growth
stages in architectural design firms in context. These interrelations
were tested by the researcher in analyzing the findings from the first
population – architects surveyed, and found substantive data which
validated the relationships between the organisational structures, the
types of cultures, and the stages mentioned in Strogoff’s (2004) study.
82
It was further found that organisations within the stages described to in
Strogoff’s model would exhibit certain attributes and characteristics
peculiar to business in that stage. In the analysis of the research, these
again related specific entity types to specific stages, by their responses
to questions, and positions on key subjects. The discovery that the
principal will gravitate toward the entity which suits his strategic
position, and the entity then embodies the traits identified for that stage
in the growth cycle is a new discovery.
5.2.2 FRANCHISING AND SIMILAR STRUCTURES
As PC Architectural Design had expressed an interest in franchising as
a possible strategy, the researcher undertook to review franchising in
regard to the practice. This revealed that franchising was a very
narrowly defined legal activity, and was commonly taken out of context
to include such structures as distributorships, agencies, and license
agreements. Shane (2005) discussed three key rudiments, which
would need to be in place to enable a business to make use of a
franchise (or similar) model. It was observed that these three points
were either in already or could be resolved, thereby indicating that this
route could be investigated as a strategic option for the business. The
researcher noted further that it may be necessary to form a hybrid
distribution model which capitalises on the most appropriate attributes
of each distributorships type.
The primary research did not provide vast insight into franchising being
used in any entity researched, however it was noted that outsourcing
was common and widely used within the industry, illustrating that more
complex networks than the one-man cluster network were in operation
and worked. Another discovery in the primary research, which supports
the argument for this type of model is the discovery of the vast
difference in the turnover per individual in each entity segment, with the
sole proprietor, or entrepreneur segment being significantly more
financially efficient than counterparts in other segments. This supports
83
the concept of expanding through forming interdependencies between
entities, where the franchisees, or agents retain this entrepreneurial
dynamic.
5.2.3 STRATEGIC MANAGEMENT AND BUSINESS PROCESS RE-
ENGINEERING
The literature illustrated that Strategic management, on an operational
level would involve either a Total Quality Management (TQM)
approach, or a Business Process Re-Engineering (BPR) approach
(Miller, 1993), depending on the state of the business at the time and
the anticipated type of growth. TQM was noted to apply to strategic
changes within a paradigm, or if applied again to Strogoff’s (2004)
model, to strategy within a specific growth stage, while BPR would
involve the strategic approach employed to take a practice from one
stage (paradigm) into another.
The researcher resolved that in order to employ the correct strategy to
the firm, and to determine if re-engineering of the firm is necessary or
correct, it would be necessary to determine where the practice is within
Strogoff’s model. The findings found that based on the data provided in
the key informant interviews with the principals of the practice, the firm
had been in the momentum phase, and appeared to be gearing to
move into the Stability phase. As this would involve a change of
paradigm, and discontinuous change, the most workable operations
strategy to employ would be a BPR based strategy, which enables the
business to rapidly progress from one paradigm to another.
5.2.4 BROAD-BASED BLACK ECONOMIC EMPOWERMENT
The findings of the research did not substantiate the views that the
researcher has about the relevance and strategic importance of BEE to
this industry, indicating instead that the majority of companies surveyed
either felt BEE had no relevance, or felt that whatever relevance it did
have did not merit in depth review and implementation into their
strategies. The literature review gave an insight into the framework
84
behind this line of policy, and the potential rewards and benefits to be
enjoyed by companies who are fully conversant with the relevant acts
and charters.
5.3 SIGNIFICANCE OF THE RESEARCH FOR THE INDUSTRY
While the architectural industry is bombarded with publications aimed at
professionals, precious few of these publications are aimed at the
business and strategic end of architectural practice management.
The literature reviewed contained predominantly generic data relevant
to any business activity, with a small number of studies and articles
bringing attention to adopting a ‘strategic thinking’ approach to
architectural practice management. In the research questionnaire
submitted to architects in the local industry, the respondents were
invited to request access to the completed research. The majority of
respondents reacted positively to this offer, indicating that as practice
managers and owners, the subject of strategic practice management is
of great interest to them.
The major significance of this research is that it made a number of
empirical discoveries, which have been detailed in section 5.2 above,
and which, based on the secondary research undertaken, were not
known before. As a result of this research, certain assumptions could
be drawn about the structure, culture and strategic position of a practice
largely by asking the simple questions, what type of entity does your
firm operate as? And how many people are there in your company. This
would already give insight as to the position of the firm.
In addition, this research has highlighted that there does not appear to
be a major ‘buy in’ by architectural practices in terms of BEE policy.
This, together with the qualitative reasoning behind why this is the
status quo would be of great significance to the Construction Education
and Training Authority. In addition the CETA would find the skills
85
shortage assessment of value in any future assessment of the
architectural curricula.
5.4 RELEVANCE OF FINDINGS TO THE FIELD OF KNOWLEDGE
This research, and its findings could bear relevance to the field of
knowledge in that it provides a point of departure, through the findings
relating entity types to organisational behaviour specific to the industry,
a point of departure for research as to the generalisability of this
observation beyond architecture, and beyond service organisations.
In addition, the revelation regarding the vast variance in efficiency
between sole proprietors in the industry and comparable individuals
within more formal entities is, in the opinion of the researcher, an
observation which potentially could have implications for larger
corporate entities, and the structures and strategies which drive them.
The findings have made important revelations as to the level of
adoption of government policy, and the underlying views on this,
coupled with the generalised attitudes toward BEE, and the lack of
confidence in the standard of education in institutions.
5.5 CONCLUSION
The research thus far has consisted of secondary and primary
research, analysis and interpretation of the data and the arrival at a
finding from this analysis.
The researcher is confident that the literature reviewed provided an
appropriate context for the research, and provided insight into the
research without which would not have yielded the results and findings.
Based on the case study in mention, and given the constraints in terms
of time and resources, the research methodology employed was well
matched to the anticipated outcomes, and the data gathered enabled
the researcher to analyse the various issues and formulate findings
based on these and ultimately arrive at this conclusion.
86
The researcher did not expect to make as dramatic discoveries as he
did throughout the process of this research, and thus his own personal
objectives were exceeded.
The research problem was proven to be too limiting in its assumptions
as to hypothesized ‘typical’ organisational structure of architectural
firms, although this did not render the research invalid, as sufficient
data was gathered to validate that a significant percentage of the
industry employ structures similar to the one mentioned in the research
problem, and the findings are relevant to architectural firms of all entity
types and sizes, and given sufficient testing, may possibly be found to
be generalisable into other related or even non-related industries.
All research objectives have been met, save for one, which is to make
use of the findings to propose recommendations to PC Architectural
Design in terms of its future strategic position, based on the outcomes
of the research. These recommendations follow in the next chapter.
87
CHAPTER SIX
RECOMMENDATIONS AND CONCLUSIONS
6.1 INTRODUCTION
The research results and findings have been presented and placed in
context with the research problem statement, and literature review, and
as such have provided a theoretical foundation for the
recommendations and conclusions which shall be presented in this
chapter. This chapter shall present the recommendations for PC
Architectural Design in terms of satisfying the practical business aims
and objectives of this research as they apply to the sponsor, PC
Architectural Design. The limitations of the study are clarified further in
this chapter, and this is intended to lead progressively into the
suggestions as to the possible continuation of research, or areas of
further research.
6.2 RECOMMENDATIONS
This research has found that it appears the source-point for all aspects
of growth of an architectural practice would be the individual needs,
motives, and strategic construct of each of the principals of the practice.
It was found that although each of the members of PC Architectural
Design had a feel of the ‘broad brush strokes’ strategy, there existed
discrepancies and unreality in the ideas expressed between the
individual members, and areas where the future postulated strategic
goal has not been linked to an action plan that can be exercised in the
present to ensure attainment of the goal. Therefore, the first
recommendation is that the principals need to establish a clearly
understood and agreed upon strategy for the practice, and agree roles
and responsibilities of each member within this strategy, thereby
establishing clarity, and enabling accountability. To this end, the
researcher shall make further recommendations to the practice in this
chapter in an attempt to provide a strategic framework around which to
develop a complete and coherent strategy.
88
6.2.1 ORGANISATION STRUCTURE AND STRATEGY
As evidenced by the empirical research findings, the business entity
could be seen to say a lot about the strategic aims and goals of the
principals. At present, PC Architectural Design is a Close Corporation,
an entity that was established relatively recently, after the business had
been a sole proprietorship for 8 years, and a partnership for 2.5 years.
Since the formation of this entity, the principals have all acknowledged
that growth in value and heightened stability has followed, which
echoes the findings herein.
As the researcher sees the situation, the practice now sits at a strategic
“fork in the road” in which the practice has to make a decision about its
future. The options that appear to exist are:
• To expand the core business organically, within the existing
structure, which would result in a large sprawling business, and
diluted revenues as evidenced by the research findings in
chapter 4 (Figure 4.3 above)
• To retain the size, structure and culture that exists following
Strogoff’s (2004) statements that practices could decide to
remain in a given paradigm, and having found a ‘comfort zone’
and focus on improving efficiencies within the known paradigm to
a point of establishing a model mid-sized architectural design
practice.
• To investigate a unique method of expansion which can
exponentially increase the value of the business, without
compromising the values of the practice, while recognising and
capitalizing on previously untapped opportunities in the industry
The researcher recommends that PC Architectural Design avoid the
first option above at all costs, as there is no real benefit to any
stakeholder, and as one of the architects surveyed mentioned ;
“Expansion of an Architectural Practice is a zero-sum game – All it does
is place additional zeros on both sides of the balance sheet, while doing
nothing to enhance the bottom line.”
89
As the second and third options are both attractive, with the second
option seeming logical, and attractive as it minimizes risk and involves
only expansion within the current paradigm. The third, while having an
inherent risk in being untried and involving the company pioneering in
uncharted territory, piloting systems and strategies which have
previously never been associated to the architectural profession, may
provide a desirable “high-risk = high-reward” value for the principals,
while becoming the key differentiator between PC Architectural Design
and other architectural practices.
It is recommended that PC Architectural Design implement their
strategy on multiple levels, following the strategy formulation model
(Miller, 1993) as illustrated in figure 2.3 above. The recommendations
below form the framework of this multi-level strategy
6.2.2 CORPORATE-LEVEL STRATEGY
The secondary research into franchising and Black Empowerment
policy combined with the primary research findings with respect to the
current industry-wide sentiment regarding BEE and the skills shortages
in personnel highlight several opportunities for the firm within this
context. The principals have indicated that they would strongly support
a franchise (or similar) model, if the research illustrated that this would
be possible, and feasible as a strategic growth mechanism.
It was suggested that a hybrid between Franchising, Licensure and an
agency model be considered, and this recommendation is elaborated
herein as part of the recommended corporate-level strategy.
As the specific strategic intent of the principals is to establish a
business which has intrinsic value, and can facilitate a pre-determined
exit strategy, it is strongly recommended that a core component of the
corporate strategy involves intelligent use and positioning of the
practice in terms of the BEE charter. Further on identifying that there is
an industry-wide shortage of personnel skilled in key aspects of
90
operating and management as well as technical aspects of the industry,
and taking into account that PC Architectural has their own in-house
training facilities, providing basic administrative, sales, and technical
training at present, it is recommended that the firm pursue being
registered as a learnership institute with the Construction Education
and Training authority, in terms of the Skills Development Act.
As this type of strategy would divide the focus and dilute attention within
the existing organisation, and as there must be a workable structure in
place for the ownership and protection of the intellectual property which
already exists, and which will be increased through this corporate-level
strategy, it is recommended that the corporate structure as illustrated in
figure 6.1 below is implemented as a minimum.
Figure 6.1: Proposed Corporate-Level Structure for PC
Architectural Design
Source: Developed by Researcher
91
In the above model, the practice would radically re-engineer its
corporate structure to develop multiple inter-related entities. These
entities would be established with legal contractual inter-relationships
between them. This recommended model will enable the principals to
realize their strategic needs, while ensuring the existing core business
remains intact, and maximizes the potential opportunities as found in
this research. The recommended functions of each entity, as well as the
strategic function and plan for each developed further in the Business-
Level and Operations-Level Strategies recommended below.
6.2.3 BUSINESS-LEVEL STRATEGY
The strategic purpose and function behind each entity within the
corporate strategy are detailed in this section. This is then elaborated
on in the next sub-section with respect to operations-level strategies for
each entity.
6.2.3.1 PC ARCHITECTURAL HOLDINGS
This entity is to be formed as a Private Company, with the specifically
stated purpose of holding all intellectual property developed by the
principals to date, and any and all properties that are developed in the
future. Its purpose it to provide a structure for the protection of these
properties, and to establish a controlled channel for the licensing of the
use of these rights. It is intended that this entity retain the intellectual
properties indefinitely and that it shall not be involved in the daily
operations of organisations licensed to use these beyond the
monitoring of standard uniform use of systems, policies and procedures
and auditing adherence to the license agreements in place. The value if
having this structure in place is the protection of the intangible assets of
the corporation, and the future income stream through license rights
and franchise fees payable by PC Architectural Design to this entity.
6.2.3.2 PC ARCHITECTURAL DESIGN
The existing structure is to be retained as a model franchise, licensed to
use the intellectual properties held by the holding company, and
established as a model organisation with all the systems, policies and
92
procedures developed and in place within this organisation. This
organisation shall be a franchisee of the Holding company and shall
pay an appropriate franchise royalty to the Holding Company. The
strategy would be to have the current staff look toward orchestrating a
management buy-out of PC Architectural Design, once the operations-
level strategy has been successfully implemented and the business has
reached stability. Once the buy-out has been effected, this business
would operate as an independently owned franchisee of the holding
company, and shall operate as a “training store” based on agreements
established with the Operations Company to provide needed
apprenticeships to trainee agents.
6.2.3.3 PC ARCHITECTURAL OPERATIONS COMPANY
This structure is to be implemented as a Private Company, and shall
operate as a master franchisee, licensed to deliver the training and
learnerships developed and owned by the Holding company. The
operations organisation shall be mandated to develop and maintain the
agency network in accordance with it’s master franchise agreement.
The strategic intention is to build this company and its agencies to a
point of critical mass, in compliance with BEE policy, and the Skills
Development Act, using the systems piloted and developed in the
model franchise, have the operations company run the agencies on
programs developed to ensure the expansion of these entities, and in
so doing, make this entity attractive to a potential acquisition by a BEE
company within the broader construction industry, subject to the master
franchise agreements as established between the Holding Company,
and the Operations Company.
6.2.3.4 PC ARCHITECTURAL AGENCIES
The agencies that fall under the Operations Company shall be largely
small one-to-three man operations, trained and licensed to operate
according to the systems developed by the Holding company and
licensed to the Operations Co for agency use. These entities shall be
bound to the Operations Company by an agency agreement. This
93
agreement shall govern the relationship between the operations
company, and the agency, and shall include guidelines for effective
financial management of the agency, payments of agency fees, and
license royalties to the operations company and the holding company
respectively. There shall also be a stipulated minimum turnover
requirement.
In order to fully implement this corporate-level strategy, the
establishment of these entities as per the business-level strategy above
is not all that would have to be done. Suggested operations strategies
are discussed next for each of these business entities.
6.2.4 OPERATIONS-LEVEL STRATEGY
6.2.4.1 PC ARCHITECTURAL HOLDINGS
Operationally the holding company would have to commence with
putting the structures in place, and the development of the legal and
contractual framework for the corporate structure. The established
intellectual property should be codified and classified and registered as
being an asset of the holding company. A piloting and implementation
agreement would have to be established with the model franchise, for
implementation and testing of systems. Research and Development
would need to be undertaken to develop a complete curriculum for
agency staff, and these should then be registered. This would place the
Holding company in a position to commence licensing out its intellectual
properties and assets.
6.2.4.2 PC ARCHITECTURAL DESIGN
The existing structure would need to evolve complete systems in co-
ordination with the holding company. Potential candidates should be
selected and succession planning should commence. As identified, this
business has been recognised as being in the momentum stage in
Strogoff’(2004) model. A TQM approach should be adopted to improve
standards and quality across the organisation and implement model
94
standards. The legal agreements with the holding company and the
operations company should be developed and concluded.
Figure 6.2 below represents a proposed organisational structure, which
would allow PC Architectural Design to operate as a model organisation
and provide for the introduction of trainees on apprenticeship through
the training and correction departments.
Figure 6.2: Proposed Organisational Structure for PC
Architectural Design
Source: Adapted from Hubbard, in Concept Technologies (1996)
The above organisational structure and all of its departments would
need to be codified and developed in detail from the bottom up in
accordance with the TQM approach. This codified data would then be
compiled as part of the policies and procedures manual for agency use.
6.2.4.3 PC ARCHITECTURAL OPERATIONS COMPANY
This organisation would have to develop a marketing and operations
strategy which would encompass the recruitment and enlightenment of
potential agents, the training and apprenticing of these agents in
95
coordination with the model franchise, and the management of these
agents once deployed into the field. The operations organisation would
also need to investigate potential grants or funding sources to fund the
training phase, in accordance with the skills development act and
CETA.
A model organisational structure would need to be developed and
implemented for this organisation, with the roles and functions codified
to ensure stability and continuity despite succession of owners, which
compliments the exit strategy of the principals. Establishment and
Developmental expansion programs would need to be developed and
run in cooperation with the agencies.
6.2.4.4 PC ARCHITECTURAL AGENCIES
The operations-level strategy for agencies would be developed by the
operations company, and run as a program with the agent. This would
include establishment programs involving market surveys,
implementation of infrastructure, and facilities, and evolve into
developmental programs, which aid in the expansion of each agency,
based on established principles of best-practice.
This provides a strategic framework for the corporate –level, business-
level and operations-level strategy recommended in terms of this
research and in relation to establishing an answer to the research
problems and objectives of the research.
As this research has been undertaken within certain confines, these
confines and limitations need to be clarified so as to understand and
appreciate the research within these parameters. This is discussed in
the next section.
96
6.3 CLARIFICATION OF THE LIMITATIONS OF THE RESEARCH
As the research was a case study of PC Architectural Design this study
was limited to PC Architectural Design in its context as an architectural
design practice in the predominantly residential market within the local
Gauteng region. As such, the limitations of the study shall be primarily
niche related, in relating the practice to other similar external role
players (competitors) within the same industry sector, and within the
same given geographical zone.
The empirical research conducted was specifically limited to the internal
Stakeholders of PC Architectural Design, and externally to Architectural
Practices in the local environment. No further limitation was made as to
size, specialization, focus, or industry niche, allowing all respondents to
provide input to the sample on which the analysis and findings were
based. The qualitative research paradigm provided the base for the
data collection approach, and analysis of the data to arrive at the
results and findings.
These findings together with the secondary research undertaken,
formed the basis for the recommendations and conclusions made
herein.
6.4 RECCOMENDATIONS FOR FURTHER RESEARCH
The analysis and findings of the results highlighted a number of issues
which would require further research, yet which were not taken up by
the researcher as this further research would not have contributed to
the objectives of this research. The suggested further research is
detailed below, and would help to determine the generalisability of the
findings in this research study.
• Investigate the generalisability of the findings related to the
variance in efficiency based on the turnover per individual in sole
proprietorships as compared to other entity types to determine if
this applies outside of the limitations of this study and this
industry.
97
• This finding could be further researched in order to establish the
implicit reasons for this, and to recommend a model for
expansion which could circumvent the loss of efficiency suffered
through organisational expansion
• Investigate the generalisability of the sentiment and position
toward BEE policy in other companies to determine if the
findings reported as being specific to entity type are valid outside
of the limitations of this research.
The above does not represent an exhaustive account of possible further
research on the subjects covered by this dissertation, but are
considered by the researcher to be the key findings which opened the
doors to further research and which would, in the writer’s opinion, add
to the field of knowledge if undertaken.
6.5 CONCLUSION
The idea of developing of a strategic plan conjures up many different
images for many individuals, and is resisted by many business owners,
being cast aside as a waste of time, wishful thinking, or pie-in-the-sky
ideas. There are indeed many texts on the subject, some advocating
methods and approaches, which fly in the face of the suggestions made
by others, and each professing to have found ‘the perfect strategy for
your business!’
All business activities have a strategy. This may seem like a sweeping
statement, however it is an observable fact. The strategy may be as
simple as “To stay in business and make money” or it may be elaborate
and confusing. It may even be a specific strategy to not have a strategy.
In this research, the sponsors had indicated a wish to investigate a
specific strategic direction for their practice. The research has
undertaken this investigation and as a result has presented the findings
of the research and made recommendations to the sponsor as to a
strategic framework for consideration in implementation.
98
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Process Singapore, McGraw-Hill International Editions
Concept Technologies Inc. (1996) Speaking From Experience
California, Concept Technologies (Publication based on the works of
Hubbard, L. Ron – No references cited)
Construction Education and Training Authority Sector Skills Plan
(Undated) CETA From internet site: http://www.ceta.org.za
Accessed 23 August 2005
Doyle, Peter. (1998) Marketing Management and Strategy (2nd Edition)
Essex, Prentice Hall
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England, Penguin Books
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Coordination. Issued as Hubbard Communications Office Policy Letter and
published in the Organisation Executive Course Volume Seven, Page 454.
Bridge Publications.
Jankowicz, A.D. (1995) Business Research Projects (3rd Edition
published 2000) London, Thompson Learning
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American Institute of Architects Electronic Newsletter.
http://www.aia.org/nwsltr_print.cfm?pagename=pm_a_20031001_fir
mback Accessed 16 August 2005
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ANNEXURE A:
Table 1: Architect Respondent Attributes By Respondent (2005) Source: Research Questionnaires conducted by Researcher
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ANNEXURE B:
Table 2: Architect Respondent Data by Entity Type (2005) Source: Research Questionnaires conducted by Researcher
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ANNEXURE C:
Architects Survey Questionnaire Cover Letter
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ANNEXURE D:
Architects Survey Questionnaire
SOUTH AFRICAN ARCHITECTS SURVEY QUESTIONNAIRE COMPANY INFORMATION:
1. TYPE OF ENTITY: _____________________________ (EG: SOLE PROP, CLOSE CORP, PRIVATE OR PUBLIC COMPANY) 2. NUMBER OF PRINCIPALS: __________________________ 3. NUMBER OF EMPLOYEES: __________________________ 4. PRIMARY FOCUS: __________________________________ (eg: Residential, retail, commercial, government, etc) 5. COMPANY TURNOVER RANGE:_______________________ (eg: 1,000 000 – 1,500 000, or 1,500 000 – 2,000 000 per annum. etc) 6. YEARS IN BUSINESS: _______________________________ 7. DESCRIBE YOUR COMPANIES ORGANISATIONAL STRUCTURE: (INCLUDE A LAYOUT DIAGRAM IF POSSIBLE)
8. DO YOU CONSDER THIS STRUCTURE AS FIXED AND UNCHANGABLE OR AS BEING MORE DYNAMIC – IF MORE DYNAMIC – WHAT ASPECTS OF THE STRUCTURE ARE OPEN TO CHANGING AND WHY IS THIS SO?
9. IS YOUR DECISION MAKING CENTRALISED (PRINCIPALS, PARTNERS, OR MANAGEMENT ONLY) OR DECENTRALISED (DEPARTMENTAL OR DIVISIONAL STAFF ABLE TO MAKE DECISIONS AND / OR ACT ON BEHALF OF THE PRACTICE) IS THIS SUITABLE FOR YOUR BUSINESS? PLEASE MOTIVATE YOUR ANSWER
10. IN YOUR OPINION, IS YOUR COMPANY OF AN ADEQUATE SIZE, TOO BIG, OR TOO SMALL? DO YOU HAVE PLANS FOR EXPANSION? IF SO, WHAT DO YOU PERCEIVE AS THE BIGGEST OBSTACLE TO THE EXPANSION OF YOUR ORGANISATION?
11. IN YOUR OPINION, HOW DOES AFFIRMATIVE ACTION AND BLACK ECONOMIC EMPOWERMENT AFFECT YOUR FIRM?
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WOULD YOU SAY YOU ARE FAMILIAR WITH THE LAWS GOVERNING BEE?
12. DOES YOUR FIRM HAVE A BEE STRATEGY? IF SO - IS IT BEING IMPLEMENTED? HAVE YOU EXPERIENCED ANY DIFFICULTY IN HAVING THIS STRATEGY IMPLEMENTED – IF SO WHAT KIND OF DIFFICULTY?
13. WHAT DO YOU THINK IS YOUR FIRM’S KEY DIFFERENTIATOR BETWEEN YOURSELF AND COMPETITORS?
14. WHAT IS OR AS BEEN THE BIGGEST STRATEGIC OR OPERATIONAL OBSTACLE TO YOUR FIRM’S SUCCESSFUL AND STABLE EXPANSION? DO YOU HAVE A PLAN TO OVERCOME THIS OBSTACLE?
15. WHAT, IF ANYTHING, BASED ON YOUR EXPERIENCE IN MANAGING AN ARCHITECTURAL PRACTICE, SHOULD BE ADDED TO THE STUDY CURRICULUM OF CURRENT STUDENTS OF ARCHITECTURE, TO ENSURE THEY SUCCEED?
16. IN YOUR OPINION, IS YOUR INDUSTRY CHANGING? IN WHAT WAY? WHAT IS YOUR STRATEGIC PLAN TO TAKE THIS INTO ACCOUNT IN THE FUTURE?
THANK YOU FOR ANSWERING THESE QUESTIONS. KINDLY FAX THE COMPLETED QUESTIONNAIRE TO (011) 615-6644 OR (011)616-2925 REGARDS, PETER COOKE
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ANNEXURE E:
PC Architectural Design Staff Survey Questionnaire SURVEY QUESTIONNAIRE – PC ARCHITECTURAL DESIGN STAFF INFORMATION: ALL STAFF AT PC ARCHITECTURAL DESIGN ARE TO COMPLETE THIS QUESTIONNAIRE AS PART OF THE RESEARCH WORK THAT I AM DOING. PLEASE ANSWER HONESTLY AND OPENLY. In answering these questions you will either be asked to provide information in writing, or you will be asked to rate the question as to how much or little you agree with it. The rating is between 1 and 5, where the numbers relate to the following ratings:
1. I strongly agree 2. I agree 3. I neither agree nor disagree 4. I disagree 5. I strongly disagree
PLEASE RATE THE FOLLOWING 1. PC Architectural Design has a clear business strategy ________ 2. I know and understand the company strategy ________ 3. I can see how I fit into the company strategy ________ 4. PC Architectural is a typical architectural practice ________ 5. I can clearly see my role in the future of the company ________ 6. Management are transparent about their plans ________ 7. The company is doing well at present ________ 8. The company is achieving its goals ________ 9. I have my own clear goals ________ 10. I can achieve my goals by working in the company ________ 11. Our clients get excellent service ________ 12. Our fee is too high ________
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13. The staff need to be strictly and closely managed ________ 14. Other staff know their jobs well and can do them ________ 15. As you understand it, what is PC Architectural Design’s strategy
for the short term? (1 – 3 years)
16. What, if anything makes PC Architectural different from other
architectural design companies? Is this a strength or a weakness?
17. What are your goals for the next 3-5 years and how does PC
Architectural play a role in your attainment of these goals?
18. What is your opinion of the company management style?
Thanks for your input. Peter C.
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ANNEXURE F:
Table 3: PC Architectural Staff Survey Responses Table (2005) Source: Research Questionnaires conducted by Researcher
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ANNEXURE G:
Guiding Your Firm Through Key Development Phases (2004) Source: Strogoff and Dubinsky as per editors note below. http://www.aia.org/pm_a_0405_phases Guiding Your Firm Through Key Development Phases Michael Strogoff, AIA, and Phyllis Dubinsky
Editor's note: This article was adapted from a presentation by Michael Strogoff, AIA, and
Phyllis Dubinsky at the joint 2004 AIA California Council/AIA Practice Management
Knowledge Community Conference in Indian Wells, Calif.
Operating a growing and successful design practice requires an ongoing commitment, unrelenting energy, creativity, capital, an entrepreneurial attitude, and a set of talents
that go far beyond those required to manage a small office. Whether expanding from a
sole proprietorship to 10 professionals or from 10 to 30 professionals, the potential
rewards are huge: greater design opportunities, larger and more significant projects,
professional recognition, higher compensation, greater financial stability, and a chance
to work with more sophisticated clients and more talented staff. On the other hand, don’t underestimate either the effort required or the impact on your personal and
professional lives that growing a design practice entails. Critical to that discovery is an
understanding of how you like to work, what you are willing and not willing to relinquish,
and the cultural foundation of your firm.
The Different Stages of a Design Business As with most other professional service businesses, architecture firms proceed through different stages as they mature.
• Infancy. Most architecture firms start as one- or two-person businesses
although some start with several principals and a small staff. During the infancy
period, the owner (or owners) determines the firm’s concept; makes almost
every design, management, and business development decision; and wears
many operational hats (designer, marketer, manager, technician). Few accounting or management systems exist and the owner easily manages by
walking around. During the infancy stage, the business depends on the owner
and would come to a screeching halt in the owner’s absence. One should note
that some firms move beyond the infancy stage within a year or two while
others, sometimes consciously and sometimes not, never move beyond this
point.
• Concentration. The firm starts to prosper as it focuses its marketing efforts
and develops operational efficiencies. The owner starts to redefine his or her role, assumes more strategic responsibilities and relinquishes some of the day-
to-day operations. Staff size usually is 5 to 10 people, although some firms
move into the concentration phase with fewer staff.
• Momentum. Through speaking, publications, awards, networking, and other
marketing-driven activities, as well as some completed projects under the firm’s
name, a firm expands its visibility and starts creating synergies. At the same
time, an owner starts to redefine the firm’s mission, refines the business
operations, and assumes more leadership.
• Stability. A firm enjoys a steady and predictable stream of new work and
repeat clients, expands the services it offers as well as its geographical reach,
fills staff positions with mature and talented people, and reinvests increasing
amounts of profit into further defining the next milestones for the firm. The
owner(s) role includes mentoring younger staff and keeping the firm focused on
its mission.
• Mastery. When this final stage is reached, a practice no longer depends on any
single person or set of owners and an ownership transition plan is solidly in
place. While always requiring talented staff, the business pretty much runs on autopilot. The one exception may be the “name on the door” designer who,
while supported by a strong core staff, often needs to be more engaged in most
projects. The good news: firms usually get to choose their clients and projects
at that point.
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In addition to these stages, design firms face new challenges as they reach size plateaus, generally at 8 to 12 people, 20 to 25 people, 35 to 40 people, and beyond 80
people. At each plateau, owners must hand over more control, hire more senior staff
and mid-level managers, obtain more sophisticated financial systems and controls, and
invest in more elaborate marketing materials and efforts. What a firm does well as a 12-
person office is not translatable into a 30-person office without redefining the owner’s
roles and developing new systems. And firms that continue to expand incrementally without implementing changes place their firms’ reputations and financial health at risk.
To Grow or Not to Grow
The most strategic business decision an owner makes is whether to grow the practice.
Some architectural designers choose to remain small and enjoy the design control and
autonomy that a small sole proprietorship allows. They experience less stress and fewer sleepless nights than designers responsible for large payrolls and competing demands
on their time. Others are driven to grow beyond the confines of a small practice and
embrace new sets of challenges.
When deciding whether to remain small or grow your practice, two considerations far
outweigh all others. First, will growing your practice help align your personal, professional, and financial goals? For example, will the professional recognition and
strategic marketing benefits gained by expanding your practice justify the additional
time, emotional energy, and impact on your family life? Will the potential financial
rewards outweigh the added risks? Second, can you grow your practice based on your
core values and vision? For example, if client satisfaction is your highest priority, will
expanding your practice enable you to deliver higher levels of customer service? If you are most motivated by design quality and innovation, will a small or large practice
provide better opportunities to achieve your design goals? And perhaps the core
question is, Will you remain true to your passions?