For much of its 72-year existence, HMC Architects, a 375-employee firm headquartered in Ontario, Calif., was known chiefly for its deep roots in Southern California’s K-12 education sector, which represented almost two-thirds of its revenues, and the region’s healthcare market.
HMC was founded in 1940 by J. Dewey Harnish, FAIA, who was joined in 1952 by Mel Morgan, AIA, and in 1955 by Jack Causey, AIA. In 1960 the firm became known as Harnish, Morgan and Causey. When Harnish retired in 1978, it was renamed HMC Architects.
For the next quarter century, HMC lived quite nicely off its reputation for impeccable service to loyal clients like Kaiser Permanente and dozens of school districts in Southern California. Business was good, and from all appearances, HMC looked to be in the catbird seat.
With the appointment, in 2004, of Randal L. (Randy) Peterson, FAIA, LEED AP BD+C, NCARB, REFP, to President/CEO, that rosy perspective was called into question. Then 44 years old, Peterson, who brought a solid reputation in education program planning and design to the top job, feared that the firm’s concentrated client mix made HMC vulnerable.
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“In healthcare, we had our eggs pretty much in one basket,” says Peterson, an honors graduate in architecture and design from Kansas State who joined HMC in 1994. “Kaiser Permanente has always been a great client, but we needed to diversify to other healthcare providers.” A similar worry applied to the K-12 business: How often could HMC keep going back to the same school districts for work?
HMC’s lack of geographic diversity also weighed heavily on Peterson. “We’d always been strong in Southern California, but not so in the North,” he says. In fact, HMC was practically unknown north of the LA County line. Nor did it have much of a presence in potentially lucrative markets like civic and justice buildings.
One other shortcoming gnawed at Peterson: HMC’s lack of recognition nationally for its design capabilities. “We were always known as a service firm, and we wanted to keep those qualities, but we wanted to add a high level of design,” he says. This problem was compounded by the firm’s organizational structure. Each of its 10 offices operated largely on its own, with no unifying management standards or design ethos.
Upon assuming the leadership eight years ago, Peterson engaged the firm’s management team in the development of a five-year strategic plan. The outcome: a commitment to be “One firm. One team. Working together to change the world through design.”
That may seem like an impossible goal to try to reach. Based on HMC’s experience over the last eight years, however, it’s fair to say that this vision has been instrumental in guiding the firm through a remarkable transfiguration, turning it into the third-largest design firm in California, with plans for even greater growth in the future.
Getting to the roots of organizational change
One of the first actions taken under the strategic plan was to change HMC’s structure from office-based to practice-based, especially for healthcare and education work. “Being able to put together teams across the firm to deliver projects for our clients has helped pull the firm together,” says Peterson. “Working collaboratively firmwide has helped us weather the storm of the economic downturn.” While there were some layoffs early in the downturn, staffing levels have recovered, and HMC remained profitable throughout the recession.
Benefits aplenty at HMC Architects
HMC offers a full menu of benefits to its 375 employees:
- Participation in HMC Employee Stock Ownership Plan, which was formed last January; all eligible employees earn a yearly allocation of stock in the ESOP
- “9/8/80 alternative work schedule”: one eight-hour day and four nine-hour days in week one, four nine-hour days with one day off in week two (80 total hours over two weeks)
- Two mandatory 10-minute breaks per day
- Up to 128 hours/year of paid time off, increasing with years of service
- Employees may transfer PTO days to fellow employees in critical need; one beneficiary received 564 hours of paid leave from colleagues
- Group medical, dental, and vision insurance; 100% employer-paid short- and long-term disability coverage
- Flexible spending accounts (medical/dental, dependent care, transit)
- Gym facilities and fitness classes at Ontario and San Francisco offices
- Cash bonus for a successful new employee referral: $1,500 for non-exempt position, $2,500 for exempt position
- Scholarships to employees and their children (through in-house charitable foundation)
- $5,000 cash award (in two installments) to newly licensed architects
- Travel fellowships (two winners/year): one week paid time off + $4,000 in expenses
- President’s Awards: Up to 20 employees (nominated by peers) honored at the firm’s annual Leadership Conference; includes two extra days of paid time off and $1,500 travel stipend
Education accounts for nearly half of HMC’s total revenues: 29% for K-12 ($25.4 million in 2011), 18% in university work ($15.9 million), according to BD+C’s 2012 Giants 300 Report.
In the schools market, HMC has a rock-solid reputation in providing service to Southern California school districts. “When we get into a client relationship, we strive to meet all their needs,” says John S. Nichols, AIA, REFP, LEED AP BD+C, Principal/Pre-K–12 Practice Leader.
HMC’s School Advisors, a subsidiary of HMC, provides clients an information pipeline from the state capital in Sacramento on issues of concern to school districts: asset management, master planning, budget cuts, consolidation, and the hot new topic, portfolio management, says Alex Parslow, Senior Vice President of Pre-K–12 Education. A mother of six and former PTA and school board member, Parslow was originally recruited by HMC to join School Advisors.
Another HMC innovation: hiring ex-school officials as consultants or staff. These ex-superintendents help HMC designers “extract” project goals from faculty and staff so that the architects can define the scope of work; once that’s in place, they reverse the procedure to help school officials get a firmer grasp of the architectural process and project deliverables.
Nichols says California school districts have to compete for students with what he calls the “rapid emergence” of charter schools. A new law also gives students greater choice in where to go to school, so school districts are fighting to recruit students.
In higher education, four years ago HMC brought Deborah Shepley, AIA, LEED AP BD+C, on board to strengthen its hand in campus master planning. Shepley has worked with more than 40 community colleges in the state. Her presence has led to recent commissions for Palomar College and San Jose Community College.
HMC sees community colleges as a logical extension of its Pre-K–12 practice. “In California, the plan check process for community colleges is the same as it is for Pre-K–12 ,” says Kate Diamond, FAIA, LEED AP, Principal, who was hired last year to lead the firm’s university and education-focused design teams.
Moreover, the community colleges have been able to shift their funding toward local bond initiatives, rather than relying on the state. “With the crisis in state funding, the community colleges have budgets that are as good or better than the Cal State schools and even the University of California,” says Diamond.
Not that HMC intends to ignore the Cal State or UC systems. The firm recently won a competition for a super-green academic building at CSU Monterey Bay. For the UC system, says Diamond, “We want to take our healthcare experience and apply it to the university laboratory market.”
Spreading its wings in healthcare
Healthcare accounts for nearly half of HMC annual revenues—$42.7 million in 2011. Patient-centered design is at the core of its healthcare strategy. In 2009, the firm was one of only five nationally to be named a Planetree Visionary Design Firm, signifying leadership in evidence-based design, patient-centered care, and sustainability.
Travel fellowships broaden HMC staffers’ horizons
Since 2007, HMC has offered travel fellowships to give two employees a year the opportunity to explore a culture or idea that could benefit their work.
In recent years, Yunnan Allen, AIA, LEED AP BD+C, Project Leader, immersed herself in China’s musical heritage to understand what she calls “the ephemeral junction between tradition and progress.”
Emily Kay, Senior Construction Administrator, apprenticed in a stonemasonry restoration project in Provence, France. David Fennema, Senior Graphic Designer, studied “things that disappear” through his photographs of the demolition of Yankee Stadium, the vestiges of Coney Island, and a cloud forest in central Mexico.
Kaysha Bucher, a 26-year-old Interior Design Coordinator in the Los Angeles office, spent eight days last year in earthquake-ravaged Haiti, working with Schools for the Children of the World, a Colorado-based nonprofit that builds and renovates schools in Third World countries.
She and other volunteers conducted physical assessments of earthquake-damaged schools (see photo, left). She also helped prepare construction documents for two elementary schools and a high school that are now being built by Haitian laborers. “We worked with them on how to do structurally sound concrete block and different ways to do rainwater harvesting,” says Bucher.
“I was most inspired by the resilience of the people and how eager they were to meet [non-Haitians] who could bring hope to their country,” she says.
The Xref fellowships provide winners a week of paid time off and $4,000 in travel expenses. Winners are chosen by a jury of consultants and current and potential clients; HMC staff input is prohibited. The program administrator, Arturo Levenfeld, AIA, LEED AP, Associate Principal, says this process gives jurors a deeper sense of “what makes us tick.” The judging rotates to a different office every year to reach a fresh group of clients, prospects, and consultants.
Kaiser Permanente has been a client for more than 50 years, but now other mega-systems, including Dignity Health, are coming to HMC. “They’re asking us to work with them in more of a business partner relationship,” says Trisha Clark, LEED AP, Vice President of Strategic Development. “Sometimes we’ll give them an option that doesn’t lead to a building, but the Dignity people tell us that every dollar they save can go to patient care.”
Fast project delivery is a potent weapon of HMC’s healthcare armamentarium. “We’re delivering projects with any kind of delivery system that’s out there,” says Jerry Eich, AIA, ACHA, Healthcare Practice Leader. A $150 million, 140-bed hospital for Universal Health Systems of Philadelphia (with DPR Construction and Turner Construction) is using lean construction and prefabrication. “We’re coming in at $842 a square foot, 1,450 square feet per bed, and 15 months early. OSHPD is amazed,” he says, referring to California’s notoriously tough hospital construction oversight agency.
“We see a lot of competitors coming into California, but we’re doing the opposite, going out geographically,” says Eich. “Kaiser Permanente has a strategy to go national over the next 15 years, and we’re going with them.”
Seeking a more Northerly exposure
Gaining a foothold in Northern California has been a crucial component of HMC’s strategic plan. Although the firm has had offices in San Jose and Sacramento for years, it was not until last year’s acquisition of Beverly Prior Architects, a 25-member firm in San Francisco, that HMC was truly able to plant its flag in NoCal soil.
That acquisition significantly expanded the firm’s expertise in civic and justice projects. BPA’s founder, Beverly Prior, FAIA, LEED AP BD+C, NCARB, Principal, is well known in state and local government circles as a tree shaker. Named firmwide Civic and Justice Practice Leader, she has been tasked with leading this activity nationally.
Prior has been busy at the municipal and county level. With DPR Group and Sares Regis, HMC recently won a project to renovate an existing building into an emergency services facility for the Marin County Sheriff’s Office. “Design-build is huge in the government market,” says Prior. “This is a kind of public-private partnership, with the developer managing the project and the sheriff getting some handle in the choice of design.”
Prior says California counties have money to build jails, but hesitate to build them over worries about being able to maintain them. She sees her mission as providing “sustainable justice”—finding ways to build less and do it right, economically, environmentally, and for the community. “I find the economic crisis exciting because it’s requiring us to fire on more cylinders,” she says.
Sharing the civic-sector responsibility on federal projects is Diamond, who brought extensive experience with the GSA to the firm. A recent coup: Being named one of four Building Teams (with Brooks + Scarpa Architects and McCarthy Construction) shortlisted by the GSA for the $322 million Los Angeles Federal Courthouse.
Fixing a laser-like focus on design excellence
HMC has taken a number of steps to shine a light on its design excellence image, starting with the investment necessary to become a Planetree Visionary Design Firm. It has established a studio, known as HMC ArchLab, under the direction of Pablo La Roche, PhD, LEED AP, Sustainable Design Director, that is devoted exclusively to sustainable design. Since it was formed in 2011, HMC ArchLab has devoted thousands of hours of staff time to support research on sustainable strategies and evidence-based design in the built environment.
Foundation tightens HMC’s bonds with local communities
Founded in 2009 with an initial endowment of $1.9 million, HMC’s nonprofit Designing Futures Foundation (DFF) has donated about $230,000 in its three years of existence, including $105,000 in scholarships to California students. The grants help promising high schoolers with an interest in architecture, design, engineering, education, or healthcare pay for expenses like test preparation services, computers, and college entrance exam fees and tuition. The scholarships can be extended for up to five years of college.
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The firm has also been aggressive in acquiring top designers like Prior, Diamond, and, most recently, Charles Dilworth, FAIA, LEED AP BD+C, as Principal and Regional Director of Design. “In the course of our discussions, Randy made it very clear to me that his agenda was to build up the HMC design identity,” says Dilworth. “I wanted to get on this winning horse.”
In less than a year, Dilworth has launched a three-pronged campaign to raise the level of design at HMC. First, he has been holding monthly “design roundups” via video telecon, where the five more northerly offices—Fresno, Reno (Nev.), Sacramento, San Francisco, and San Jose—present their current work. Dilworth does not hesitate to say that at times these critiques have been quite frank.
Dilworth’s second initiative has been to be what he calls “an advocate for design” at HMC: “I look at every project and ask, ‘Can we push for design here? Can we make this project worthy of an award?’”
Finally, Dilworth has been nudging HMC out of its comfort zone. “The San Francisco office is kind of a startup, so we want to pursue projects that are just outside our wheelhouse.” Pressured by intense competition from other firms, says Dilworth, “We have to put a lot of work into a project even before we get the interview. You can’t just go in to an interview with ideas alone. You have to go in with sophisticated design work and solutions.”
Peterson says he sees HMC becoming a “national presence.” He does not hesitate to say that further acquisitions are well within the realm of possibility. He’s also looking to widen the firm’s client base, especially among mega-healthcare systems like Universal Health Services, Banner Health, and Dignity Health—major players with plans to expand nationally and whose coattails HMC hopes to ride.
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At the global scale, the firm recently won its first international competition, the 2,000-bed First People’s Hospital in the Shunde District of China, a new city being built southwest of Hong Kong. The 2.8 million-sf hospital was the recipient of the 2011 AIA Academy of Architecture for Health Unbuilt Award. HMC is also designing a 250,000-sf campus in Santiago, Chile, for Duoc UC, a division of the Catholic University of Chile.
Managing for tomorrow
To more effectively manage its ambitious strategy, in July HMC created a dual-leadership structure, elevating Brian Staton, Assoc. AIA, a 20-year veteran of the firm and Regional Manager of HMC’s SoCal offices, to CEO, with Peterson retaining the presidency. He will focus on overall strategic direction and lead design and business development, while Staton will be responsible for day-to-day operations and project execution.
Today, HMC Architects is the third-largest architecture firm in California (after AECOM and Gensler), the number two healthcare design firm in the state (after SmithGroupJJR), and the overall leader in education in California. It is the eighth-largest U.S. architecture firm (2011 revenues: $87.97 million), according to BD+C’s Giants 300 rankings.
But that’s not enough for Peterson. “We want to grow, both within our markets and within the profession,” he says. “We want to be a better design partner for our clients, and be recognized nationally as a leader in our markets and in our industry.”
A commitment to its staff and to the communities and markets it serves, and a passion for design—these are among the qualities that make HMC Architects one of Building Design+Construction’s “Best AEC Firms to Work For.”