What's your problem?
One of the major problems in the construction industry is keeping track of employees and making sure the work business owners are paying for is actually getting done. Systems are used to do this as well as administrative staff. With the amount of effort it takes to handle that level of oversight, the result is an incomplete project.
Experience has proven that you can’t trust the entire team, so software and people are required to prevent issues in the workforce. And as you know, experience is what you get when you don't get what you want.
I hear owners say, “I’d love to have some simple tool to solve my problems, but I can’t even get my people to write in their time correctly,” is the common refrain from frustrated owners who don’t have a belief that their team is up to anything more challenging than hitting a nail. I find myself thinking “Do you really have so little trust in the ability and integrity of your team?”
I’ve observed job sites where workers look busy jumping from task to task, handle change orders, move materials, deal with rework or other problems, all of which increase the length of time each project takes and end up costing thousands of dollars in lost revenue.
We’ve all worked for companies that tried to recruit good talent by promising great benefits, perks, higher wages, and great team members, but those items don’t translate into better quality of work from the standard pool of workers.
I’ve noticed a trend in the construction industry where businesses are forced to wait on outdated accounting practices to determine if they made any money on a project that just closed. Because it can take anywhere from 30-90 days after closing a project, nothing can be done to fix the issues that have been discovered because it’s too late. The owners don’t have the information they need in a timely manner to know how to address the issues preventing them from making a profit.
Owners find themselves “shooting from the hip”, challenged by the administrative nightmare of putting everything into an excel spreadsheet, calling the field teams for completion data for tasks, so they know how much they should bill the general contractor for the work that has been completed. Result: they guess. These are industry wide problems experienced by most construction owners.
There many of these techniques put in place as solutions to these problems.
· A QC Manager in place to check the quality of work
· GPS/Geofence to make sure employees are clocking in on the job site
· Redundancy systems to verify accuracy of time punches
· Paper and electronic time cards
· Administrative staff making sure all punches are correct
· Monitor employee's location to make sure they are on task
· HR Policies like write ups, discipline action plans, termination notices
· Employee mediators to handle employee disputes
· Recruiting plan to keep staff at maximum capacity due to turnover
· Safety enforcement to keep employee behavior in line
Nope, Not So Fast!
The reality of these “solutions” is they are an attempt to correct the symptoms of a deeper foundational issue within the company. The extra money being spent on software, staffing, rework, or behavior modification efforts just to have people do the job they were hired to do and results in a huge financial impact to the company.
Upon What is Your Foundation Built?
Like most owners, you deal with problems when they happen. You’re used to putting out fires and you’re good at doing it if you’re still in business today. You’ve probably implemented one or more of the strategies mentioned earlier to accomplish this.You feel good about yourself because you’ve solved a problem.
Picture this: You have built the house of your dreams. It’s everything you hoped it would be and you feel great satisfaction in living there. After a few months, or years, of living you notice one of your doors doesn’t close very well. It sticks. Later you notice a crack in one of the walls at another part of the house. Another time find your basement flooded and finally the roof begins to leak.
What is going on? Your house is falling!
If your house is crumbling to the ground, you don’t look up, you look down at the base, the foundation. The sticky door, the crack in the wall and the flooded basement are symptoms of the greater issue at the foundation. Before you can make repairs, you must return to the foundation.
Take a stool. The strongest and simplest foundation for a stool is to build it with 3 legs. With three, the stool has balance and stability. Your business is much like the stool, in order to achieve stability there must be a strong foundation comprised of three core elements, or “legs”.
Leg 1: Goals
A goal is frequently described as a target or accomplishment. There are numerous goals that can be part of the business plan: sales goals, project completion goals, safety goals, training goals, attendance goals. The list is practically endless. But(big one) for all businesses that want to stay in business, the most important goal is profitability. If a company is not profitable, then it will not remain in business for long.
All too often construction owners operate with a gut feeling for what they should be charging on a bid. When they are done with the project, they gather up all the receipts and look at the costs and hope that they have made money. We call this a “rear-view” mentality: looking backwards in the rear-view mirror to see what happened. Rear-view mentality is risky because you can’t solve problems when the first arise.
Setting a revenue goal is one of the clearest ways to measure the success of an organization. It provides the staff with the focal point for achievement and has an added benefit of providing greater cohesion among the team. In construction, where companies are looking for an edge over their rivals, setting goals is a good practice to incorporate to improve the foundation for success.
Having the goal of profitability as the only “leg” of your foundation can lead to poor decisions, leaving the business a bit wobbly. Decisions that save money, but at a cost of something even greater, your values.
Leg 2: Values
The goal of making money must be in line with defined values to keep the foundation solid. Values in a company start at the top with the owner and must be applied to every aspect of the business. Of all the values one can pursue, the one that encompasses the purest of behaviors is Integrity.
Are you, as an owner, asking your team to cut corners to get the project finished on time so you can move on to the next project and bill for completion? Are you using cheaper materials than what you quoted on the bill? Are you pushing your team to use their own time to help the project be finished? Are you intruding on their personal lives because the “project has to be done?” For your employees, it can be as simple as being on time to work, clocking in when they start working not when they leave their house, not cutting corners, or accurately reporting how much work was completed. If the owner models integrity, the staff often adopts the same value. If the staff is trustworthy you will discover that projects operate more efficiently, morale is greatly improved, and clients are happier with the completed projects.
Leg 3: Measurements
“Tell me how you measure me, and I will tell you how I behave.” (Goldratt, 1990). We frequently go back to this quote because it makes such a difference in managing company behaviors. It allows owners to weed out what isn’t important and reinforces the focal point that is critical to operational success. Measurement is the third foundational leg of the stool because it supports the other two legs. Where Goals are the "Why” that is trying to be achieved, and Values are the "How” behind company decisions, Measurements are the “What” that gives organizations the right targets of success.
Measuring the value of integrity is done by looking at the frequency of issues related to honest dealings with customers and co-workers.
· What is the standard for quality of work?
· How is employee morale?
· What is your net promoter score (customer satisfaction measurement)?
· Are you getting referrals?
· Are you winning more bids even though you may not be the lowest price?
· Can you count on the data you receive from your staff?
Measuring goals is easier to manage because goals, by design, are measurable. Profitability is a measurement of how much you are keeping after all expenses are paid. If you are waiting till the end of a project to know if you are profitable, you are leaving money on the table. Knowing how to measure your profitability in real-time allows you to adjust operations in a timely manner. Good measurements prevent rear-view mentality. Imagine if you could improve the current job while it’s still in action. You can, through accurate measurements of productivity and profitability.
Just as the foundation determines the strength and durability of a building (or stool), the same thing can be said regarding a company. These three foundational legs are a great way to have simple but effective business plans that will be manageable across your entire organization. By concentrating on the most important Goal of Profitability, the most important Value of Integrity, and accurately Measuring them both, your business will be well on its way toward establishing itself as the resource that contractors will choose again and again over the competition, ensuring long term success.