Why Employees Are Taking Ownership of Their Architecture Firms

The architecture firm BNIM has always been a leader on sustainable design. In the late 1980s, principal emeritus Bob Berkebile was one of the first architects to push the industry to take the idea of green buildings seriously. Then-President Bill Clinton even recruited him to lead a climate-minded restoration of the White House. Berkebile and his Kansas City, Missouri–based firm — he’s the “B” in BNIM, alongside Tom Nelson, David Immenschuh and Steve McDowell — received top honors from the American Institute of Architects in 2011, among many other accolades.

Now the firm behind such projects as the US Embassy expansion in Kampala, Uganda, and a proposed South Loop park to deck over a highway in downtown Kansas City hopes to stand out in another way. In October, BNIM announced its transition to an employee stock ownership plan, or ESOP. The firm is one of a handful in the industry to recently embrace the employee-ownership model, following similar moves in 2021 by SHoP Architects and Zaha Hadid Architects.

BNIM principals Laura Lesniewski and James Pfeiffer spoke to Bloomberg CityLab about the decision, feedback from clients and the impact this move is already having in terms of designing projects and recruiting staffers. This interview has been condensed and edited.

Bloomberg CityLab: How did the discussion about going to an employee-owned company model start?
Laura Lesniewski: We liked it because it aligned with our values. It was a gracious way to transition from a few owners to essentially the entire firm. Anybody that’s here for a year starts to accrue shares and value in the firm. It encourages people, maybe more than other architecture firms, to really understand the business side of the practice of architecture and be more informed in their decision-making. That’s our hope.
James Pfeiffer: We have this phrase that no one knows as much as everyone. We use it almost every day. It really is one of our core values. The transition and how it’s come about has been a natural evolution of our ethos.

Bloomberg CityLab: Did something happen to inspire this move?
Lesniewski: Not really. We have actually been talking about it for a number of years and essentially leaned into it in 2023. We have a lot of young folks on staff. It seemed like it would be great to get them in. It’s seen as a benefit to everybody in the firm, and we were pleasantly surprised by how much the younger folks really were attracted to it and excited about the announcement.

Bloomberg CityLab: How does an ESOP work for an architecture firm? Did you work with consultants?
Lesniewski: We had a couple of folks that were in the accounting and legal world that are familiar with what an ESOP is and how you transition to one. At a certain point, you bring onboard a trustee of the ESOP. That person is helpful in terms of educating us. I will admit, and maybe I shouldn’t, there’s still a bit of mystery about how this whole thing actually works. One of the things is how long it takes to actually understand it, even after you’ve made the commitment to do it. It’s a little unnerving sometimes. We don’t know the value from our first year until later this year. A lot of people have that question. What do employees own? How many shares do they get? That’s part of the mystery currently, because of the accounting of it all.
Pfeiffer: Because everybody is now a co-owner, we are acutely aware that it’s going to be vital for us to continue to maintain a high level of constant and transparent communication across the practice.

James Pfeiffer and Laura Lesniewski, principals at BNIM.Photo: Dan Videtich courtesy of BNIM

Bloomberg CityLab: Did anyone object to the proposal?
Pfeiffer: I don’t think there was a single objection. There were lots of questions.
Lesniewski: It’s an additional benefit to each individual. It’s not like they’re trading something for something else.

Bloomberg CityLab: Why was this an attractive idea for you specifically?
Lesniewski: I think it goes back to feeling more ownership of the firm. It’s a little different for us, because we’re already managing the firm. We’re both principals here. If anything, for me, the main benefit is seeing how excited the younger folks are in the office.
Pfeiffer: Culture is really important to us here. By doing this, by moving into this kind of model, it further strengthens that part of the culture and who we are and what we can offer to our ourselves, each other and our partners.
Lesniewski: We really like the people we work with.
Pfeiffer: Yes, it makes us potentially more profitable and more efficient and all those things. From our perspective, it also strengthens our design. If we have that level of commitment and buy-in, it’s going to strengthen our design excellence across the entire practice. That isn’t just for our design staff. That is all of our staff, designers, administrators, everybody who works at BNIM is a part of this.

Bloomberg CityLab: Can you give me an example of a way the ESOP has strengthened a design?
Lesniewski: It’s only a few months in. We haven’t had enough time to notice a particular design decision being made a certain way or a certain collaborative move that we’ve done differently. It’s really just been the little bit of conversation that’s been happening. You can tell people are thinking about it. Should we do this? Or even, do we have to do this?
Pfeiffer: It’s related to the level of inquiry that we might see. It’s hard to necessarily attribute every comment or question or thing that you notice to a particular thing like this. But in the back of your head, you wonder, hmm, that’s really interesting — I’m hearing somebody speak up in a way that I haven’t heard them do before. There’s a certain attitude that that person or team is coming [with] at a certain problem. That makes me wonder if it’s because they feel more ownership and commitment to this. It’s hard to necessarily know exactly, but it’s a factor.

Bloomberg CityLab: Have you had any feedback from clients?
Lesniewski: We did have one who said, ‘All your people already act like they’re owners anyway.’ We have heard from other firms that have reached out. At least three firms that I have a great deal of respect for have reached out specifically. Almost all firms have some kind of transition question going on.

Bloomberg CityLab: I know it’s only been a short time, but have you noticed any difference from applicants? Are people knocking down your door?
Pfeiffer: A part of this has been about attracting and retaining talent. People want to be part of something meaningful, they want to be part of something bigger. They want to be strong contributors to the growth and prosperity of whatever that is that they’re going to be involved in. Yes, I would say we have had quite a lot of interest externally from prospective partners and colleagues. Probably in part of because of this, but also in part because we have a strong brand and a strong set of values and core purpose — all those things that were already there.
Lesniewski: The cycle for us right now, especially for new people coming into the profession, is people looking for either summer internships or jobs after their spring semester. We’re starting that process of going to the different campuses and talking with folks, participating in mock interviews, all that process that we do to be engaged with the universities. And so this is really the first round after the ESOP to really start talking about that and offering it as a thing that would attract people. Our younger folks that have just been out of school for like a year or two have noted that this will be an important thing to be able to say to people — that their friends would recognize it as something that’s different.

Bloomberg CityLab: What are the next steps for implementing the plan?
Lesniewski: We’ll have a board now with external members on it, so we’re in the process of identifying those people. The most common question that folks have inside and outside of BNIM is: How many shares do I get? What’s the value of them? The end-of-year finances for 2023 have to happen, that has to be vetted to figure out the value of the firm, the value of the firm then has to be vetted — this is going to be an annual cycle from now on. Sometime this summer, we’ll probably get to a point where people will receive their first statements for what shares they get and what their value is. The trustee has been clear with us that it’s like a home mortgage: You buy a house, but you actually only own a tiny, tiny bit of it. And then you vest over time. And the goal is that the value of the firm increases over time. So those two things are what brings value to somebody who stays in and invests their energy into the place.

Bloomberg CityLab: What advice would you have for an architecture firm considering an ESOP?
Pfeiffer: Talk to people who’ve gone through the process. It sounds really simple, but it’s a very valuable step to take.
Lesniewski: What’s been surprising to me is how willing people are to talk about it and share their own questions, their own process and evolution over time. It’s a very lively conversation. Because it’s a business thing, it’s a very personal thing, it’s about the culture of the firm. It expands into all aspects of the practice, in a way. I’ve been surprised by how excited people are to talk about it.

As seen in Bloomberg and written by by Kriston Capps.