Malcolm Pitcher files his concluding report on last November’s Benchmark 1999 in Miami, where several hundred US managers came together to reveal their profitable practices to an audience of their peers.
A key message from the Benchmark conference was that labour’s day has come. The old order whereby the builder was king and labour did what it was told are over. Builders have to come to terms with this fact or face isolation as their more enlightened peers find ways to motivate their own staff, build strong relationships with sub-contractors and attain the ultimate accolade of builder of choice.

People – attracting the best

The lack of skilled people and the low intake of young people into the industry were big issues for everyone at the conference. A recent survey of 10 000 high school students listed 252 careers they might wish to choose. Construction came 251st just beating “cowboy” for last place.

One housebuilder suggested that if the US immigration rules were rigidly applied then house building would grind to a halt across many of the southern states.

Michael Anleitner, a leading consultant asked delegates if they have, or would expect, their children to build new homes, there were not many nods of agreement.

Michael went on to warn delegates that the Sony Playstation generation wants jobs that are exciting, interesting and stimulating. They respect neither age nor authority. So how are we going to convince people to work outside in the mud, heat, rain and cold, when they can write computer code in climate controlled offices in Silicon Valley?

He advised delegates to think about:

  • Workforce scarcity being here to stay

  • People wanting respect – they won’t accept authority on face value

  • Offering more than just a salary – invest in training and development. Training and development costs are less than continually hiring in new people because of a 30% annual staff turnover

  • Hire for attitude – train for skill

  • People respond to leadership.

Retention, says Michael, is a matter of respect. Give and you will get it. If you think employees are interchangeable “meat machines” you won’t be disappointed; they’ll live down to your expectations!

Finally for those not convinced that training and development are worthwhile Michael asked delegates to consider the US Marine Corps. They take some of the lowest motivated people in society and turn them into the finest military personnel.

The NAHB talking about their quality awards stated that people and performance management were the areas where builders do worst in terms of the awards judging.

They supported the need to train people and the need to measure employee satisfaction on a regular basis.

Mark Brock of Shea Homes San Diego, a 800 unit pa builder, showed his way forward by mapping out his company’s thoughts on what makes an organisation attractive to work for. In his opinion an attractive organisation is NOT one that is comfortable with the way things are, blindly adheres to procedures, lets sales alone worry about customers or puts profitability before all else. He describes an attractive company as one with:

An evolving system of practises

  • Openness to learning and new ideas

  • Focus on customers

  • Total participation by staff

  • Empowered staff

  • Proactive improvement

  • Teamwork.

Training and personal development figure highly in the company, supported by very detailed individual job descriptions and performance goals. Sophisticated techniques are used to evaluate the benefits of training to both staff and company. These aims are further supported by packages that allow up to 30% of salary to come from performance bonuses and continuous employee feedback research.

A few eyebrows were raised when it was revealed the job description of a site manager carries an expectation of 60wpm typing skills and a working knowledge of Microsoft Office within three years. Without such skills at the site level the company believes that long term IT benefits will not be realised.

Leadership

The key to achieving highly motivated and loyal staff is solid and consistent leadership. Leadership that is concerned with building a culture in which values are shared across the company. The term used is Alignment.

As one builder said: - “Your people will listen to your words but watch your feet. If you don’t walk the talk you yourself are not aligned so what chance have your employees got?

“Competence is not a ticket to remain in my company. You are frankly lying to your employees if you are teaching them a vision yet you have a senior manager who clearly doesn’t walk the talk. The toughest decision is to fire a competent person but it will cost you a lot of money in wasted time and effort if you don’t.

“Unless you are sick and tired with communicating your vision, mission and values then you’re not doing enough, but once you hear your people quoting your words as reasons why or why not they will do something, then you know you’ve started to make the breakthrough.”

Becoming the builder of choice.

Mark Upton of Engle Homes, Phoenix Arizona, believes that we need to end the king/servant relationship that is still to be found even in many so called partnering regimes. He highlights his reasons for wanting to be the general contractor or builder of choice as follows:

  • Higher quality construction

  • Higher customer satisfaction

  • Cycle time reduction

  • Higher profits for all

  • Survival

To become general contractor or builder of choice he believes a builder must:-

  • Focus on processes to increase contractor profitability

  • Simplify and speed up payments

  • Even flow production.

  • Employ high quality site managers who are very process driven

  • Be very strict with customer options policies – do not allow late changes

  • Have high quality, accurate drawings

  • Attack problems with vigour and show results to the contractors.

  • Help the contractors to understand their cost structures.

Unify International, Tustin, California is a consultancy led by Steve McGee that specialises in builder/contractor relations.

Steve believes that if we think the subcontractor situation is bad today, then in seven years’ time it will be much worse. The industry is being squeezed between a worsening shortage of new entrants and the increasing number of workers quitting in their prime - the average age of someone leaving construction dropped from 43 in 1985 to 33 in 1998. He believes labour’s time has come as other industries poach disillusioned construction workers.

With labour in short supply and able to pick and choose whom they work for, how do you ensure that you become the builder of choice for contractors? Steve helps builders understand how partnering with sub-contractors can take on a whole new dimension when that relationship reaches out to the site. The best labour ultimately wants to work for the best contractors, who in turn want to work for the best builders. These HighProfit™ Partnerships as Unify International calls them set goals to benefit each and every stake holder, eg:

  • 1% - Reduced price from vendor to builder

  • 1% - Improved profit to vendor

  • 3% - Improved compensation package

Steve urges chief executives to spend more time in the field with contractors and not delegate this to others. He warns that you can’t keep up with growing customer expectations if your contractors aren’t evangelical about you and your products.

You need to be wary of contractors who have become conditioned to telling you what you want to hear. You must give then permission that it’s OK to give feedback, not only to the builder, but to each other.

Through the seven-step HighProfit™ Partnership approach (see below) some builders and contractors have achieved a win-win situation. In one example, through reducing construction hours and cycle times a carpentry contractor was able to boost the work capacity of his crews by 65%. This enabled him to pay top performers more money and release less capable people.

With a reputation for quality and top pay he was able to attract the best carpenters in his area. Better quality work led to lower waste and a reduction in overhead costs. In turn he was able to offer his builder lower prices on future bids. The builder passed on these lower costs in the form of value adding benefits for his customers.

Unify International’s seven steps to creating HighProfit™ Partnerships

1) Benchmark your current position through the eyes of your sub-contractors. Consider doing this through a third party audit such as that offered by Unify International as sub-contractors can be unwilling to give candid feedback directly to builders for fear of losing future jobs. 2) Select the contractors and developments to test High Profit™ Partnerships. Developments that are already performing well are the best ones to choose, as they are the ones most likely to have motivated people who are willing to provide and work on new ideas. 3) Gather ideas for efficiency from your contractors and your own on site staff. Initially some contractors may be reluctant to take part for fear of getting others in trouble. Prepare to be tested by them as they wait to see if their ideas will be misused. Once you have built confidence then ideas will flow. According to Greg Minor, president of Minor Construction, a framing contractor: “Our guys on the job site didn’t say much initially because they were afraid they would get others into trouble. Once they learned that this was not going to be the case, that the job site would be easier to work on and they would make more money then the ideas came forward non-stop”. Don’t make gathering data too hard. As Steve says: “Contractors are not the best form fillers, people who work with their hands regard forms with suspicion. They believe they are paid to work, not fill out forms”. Steve’s asks just five questions:
  • What is the problem and how could it be solved?
  • It it the sub-contractor or the house builder’s own department causing it?
  • Who does it affect?
  • What is the cost in time or materials?
  • How often does it occur in every 10 homes?
4) Evaluate and decide which ideas to execute on your test homes. An important tool to help everyone to evaluate the priorities is the consequential analysis flowchart. This maps out all total consequences of what may first appear to be a very minor issue. For example a contractor who consistently misses a deadline can have a serious knock-on effect throughout the whole build process of the house. The consequential delays and time spent reorganising work can amount to thousand of pounds. 5) Try out new ideas on one or two test homes. An important message here is “accuracy first, speed second”. Work closely with your sub-contractors to test the ideas. By concentrating first on accuracy you can ensure that sub-contractors become more comfortable with the processes and are better able to provide you with feedback. 6) Re-evaluate results and measurements of the test ideas. Typically Steve finds that of the new ideas tested one third have a substantial positive impact, one third a minor positive impact and one third are suspended or dropped. 7) Put your best ideas into full production. A “member get member” approach works well. Invite your other staff and contractors to meeting where those who have been involved in the tests can give feedback on their own experiences. Rick Bush VP of purchasing of Town and Country Homes Chicago believes that the spontaneous testimonials given by contractors and staff involved in the tests were the most important influence in getting over 400 other employees and contractors on board.

Source

Building Homes