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What’s your hourly rate?

by Mel Starrs on March 15, 2010

in Economics, Productivity

A story in BD caught my eye last week:

A London architect is offering short-term staff an hourly rate of just £5.71 — below the minimum wage of £5.80

What BD had done was split the hours per week (70 in this case) to arrive at an hourly rate. Fair enough. How many of us do this ourselves? Do you work your contracted hours or slightly more? If you’re in the construction industry (and especially given the current climate) it’s likely to be more.

The poor architect who gets £5.71/hr in the example above is probably under no illusions as to how many hours they are expected to work, but if that same wage was translated to a typical 37.5 hrs per week, 48 weeks per year, it would equate to a wage of £10,278.  Still not great (!), I agree.

But let’s see what happens when, say, a BREEAM consultant on £28,000 per year on a typical contract starts to work a ‘few’ hours extra. At first glance, they are on £15.55/hr (almost 3 times as much as our poor architect further up the page!). But say they work an average of 40 hours per week rather than 37.5? The hourly rate drops to £14.58/hr. That extra half hour a night equates to a 6% drop in hourly salary!

Now this is not a rally to the workers to “work to rule”, but a cautionary reminder to not always take annual salaries at face value. This works at management level too – getting paid £75k a year, but expected to attend black-tie functions, networking events (say 10 hours per month) and on top working an average 55 hour week can drop a hefty £41.67/hr to say, £25/hr.

A long hours culture is still pervasive (in my opinion) in this industry and I think I have one explanation why. If most fees are fixed (rather than on an hourly basis) there should be an incentive to work smarter to reduce the number of hours (increasing the effective hourly rate).  However, projects still need to be delivered on time, and so people end up squeezing work into the time available. In the meantime, people still have some non-billable tasks to do which creep onto the end of their day. From a business point of view this could be a good thing, especially if it doesn’t show up on the books. Could this explain the increase in profitability seen on the RICS consultants KPI’s (full doc)?

Profitability (median) has gone from 8% in 2002 to 14.8% in 2009, with a corresponding increase in productivity from 31% to 37.5% (constant 2002 values).

Of course this is only one (rather cynical) view – we could of course all be working smarter and harder – I suspect there is a little of each involved.

If switching positions (or finding a new job after a period of redundancy) have a good hard think about how long you will be expected to work, travel time, the level of ‘billable’ hours you would be expected to meet, etc, etc. But I’m sure you know all this already.

That said, £5.71 is still appalling…

  • http://www.markasaurus.com Mark

    One of the most pervasive wage issues in the architecture industry is the practice of building your ‘business model’ around making people work unpaid overtime. While I completley agree that at times it is often necessary to work more than 37.5 hours a week to get the job done, the firm in question in the BD article was telling people up front that they were going to have to plan on working 8am-10pm on a daily basis! They are not alone in doing this, but it’s one of the more extreme examples. Architects need to learn to run their offices like businesses: I firmly believe it is possible to run an office effectively and keep high design standards without making everyone work 60+ hours a week! Also, £10,278 is FAR below what the RIBA salary survey indicates is typical for this type of work.

  • http://www.markasaurus.com Mark

    One of the most pervasive wage issues in the architecture industry is the practice of building your ‘business model’ around making people work unpaid overtime. While I completley agree that at times it is often necessary to work more than 37.5 hours a week to get the job done, the firm in question in the BD article was telling people up front that they were going to have to plan on working 8am-10pm on a daily basis! They are not alone in doing this, but it’s one of the more extreme examples. Architects need to learn to run their offices like businesses: I firmly believe it is possible to run an office effectively and keep high design standards without making everyone work 60+ hours a week! Also, £10,278 is FAR below what the RIBA salary survey indicates is typical for this type of work.

  • http://www.thirlwall-associates.co.uk Claire Thirlwall

    My partner is director of a Landscape Practice and they have always had the policy that you are paid for the hours you work. This isn’t abused by staff and is based on the concept that the company receives fees for your work so you receive your share.

    I have freelanced at practices where 60 to 70 hours with no overtime was the norm but the staff turnover was shocking and loyalty non-existent. My partner’s practice has a very low staff turnover and I think this is in no small part due to this policy.

    Running my own practice I don’t like to think how little per hour I’ve earned in some months but as my own business that is my choice!

  • http://www.thirlwall-associates.co.uk Claire Thirlwall

    My partner is director of a Landscape Practice and they have always had the policy that you are paid for the hours you work. This isn’t abused by staff and is based on the concept that the company receives fees for your work so you receive your share.

    I have freelanced at practices where 60 to 70 hours with no overtime was the norm but the staff turnover was shocking and loyalty non-existent. My partner’s practice has a very low staff turnover and I think this is in no small part due to this policy.

    Running my own practice I don’t like to think how little per hour I’ve earned in some months but as my own business that is my choice!