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No. 7: Owner, Open Your Eyes
PEOPLE AND PROCESSES MATTER MOST
Editor’s Note: Following is part seven of our eight part series called “Better Next Year,”
by Fred Ode, CEO, chairman and founder of Foundation Software.
The sky is falling! The sky
is falling!” Unfortunately,
many companies operate
their business with this
style of crisis management.
Busy with urgent details and pressing
decisions for their growing businesses,
lots of contractors can only
react to problems and then attempt to
fix them. Sometimes these fixes have
good results, but many times they
create even more problems, which
must be dealt with in a hurry.
Successful contracting companies,
meanwhile, take a more proactive
approach to management. Rather
than rushing to solve immediate problems,
they take a step back and look at
the factors impacting their business.
The most essential factors to evaluate
and review are people and processes.
Evaluating People
In today’s ever-shrinking pool of
skilled workers, contractors can’t
afford to lose talented people, hire
the wrong people or employ people
in the wrong positions. Having “the
right people, in the right seats and on
the right bus,” a concept described by
Good to Great author Jim Collins, is
what matters most.
People issues cause more promising
contracting companies to crash
and burn than any other factor.
Rapidly growing contractors often
reach a crossroads when it comes time
to hire more experienced workers,
often because owners are reluctant
to reassign employees who have
been there from the start. At many
organizations, misaligned jobs and
people problems will grow in direct proportion to changing business
needs and market conditions.
So what about you? Do you have
the right people working at your organization?
And are they in the right
role? Perhaps your spouse, who helped
get your business off the ground, is no
longer capable of handling all office
functions. Maybe your estimator, who
insists on doing manual calculations
(as he’s always done it), is holding the
company back. Or perhaps you have a
few bored employees who are looking
for more challenging work or leadership
positions. The only way to know
for sure is with regular reviews and
evaluations.
Measuring employee performance
and aligning employees to roles where
their skills will be most useful takes
planning and effort. But the payoffs
can be huge. First, employee assessments
should include everyone—from
owner and managers to laborers and
office staff. Second, understand that
employees’ skills, experience and
training need to be checked periodically.
Third, after considering
employee skill sets, tailor training
programs or make new job assignments.
And finally, update and revise
assessments regularly to ensure that
employees’ skills are keeping pace
with the company’s needs.
Not worth all that effort, you say?
Then think about all the hours wasted
and money lost by having people in
jobs that they are not qualified for or
not excited about. If it’s beyond your
abilities, consider specialized staffing
and recruitment services to help
ensure that new hires possess the skills
and training needed to fulfill the company’s
requirements. Software and
web-based skill assessment solutions
are also available to help contractors
manage their talent pool. Aside from
matching the right people to the right
job, good assessment techniques can
also lead to increased employee productivity,
greater job satisfaction and
a reduction in turnover.
Evaluating Processes
In addition to people, contractors
need great processes to make them as
productive and profitable as they can
be. Most start-up companies initiate
the basic processes needed to get
things done and then never bother
to evaluate. Successful companies
analyze how all processes interact and
then work to bridge the gaps.
So where does a contractor begin
to evaluate the hundreds of processes
that go into the numerous jobs in a
typical day? Begin with the most
obvious (sky is falling!) areas of inefficiencies. Your office manager, for
example, complains of lost change
orders and says she has no way of
knowing which change orders have been billed or approved. Evaluating
your procedures from the field to the
office, you may find a breakdown in
the way managers are submitting
and documenting change orders, or
perhaps your accounting software
cannot track and report change orders
to your requirements.
Not every inefficient process is easy
to identify. For example, jobs have
doubled this year at your growing
company, and your job cost report
shows nearly all are on budget. With
access to historical data, however,
you determine that labor productivity
has slipped significantly over a three-year
period, resulting in lower profit
margins. Now, your attention shifts
to estimating processes, and so on.
Evaluating all business processes,
from the obviously inefficient to the
seemingly flawless, will keep you on
a steady path of improvement. The
goal is to aim for perfection and never
assume that the way you are doing
things now is the right way. When
it comes to efficiency, most construction
companies have plenty of room
for advancement.
Just as a solid foundation provides
for a stable construction project, it
takes great people and great processes
to build a great construction business.
Owners need to take the time to step
back, avoid crisis-only management
and evaluate the two most important
internal business factors. In order to
become better next year, be sure to
put people and processes at the top of
your priority list.
Fred Ode is the CEO/chairman of
Foundation Software, developer of construction
job cost accounting software
called FOUNDATION for Windows. For
further information on FOUNDATION
for Windows, visit www.foundationsoft.com. Fred Ode can be reached directly
by phone at 800.246.0800 or e-mail
fred@foundationsoft.com. |
