High-Performing Contractor Newsletter

December 2012 #99

This e-newsletter is dedicated to supporting High-Performing Contractors and all contractors who are working to become one. Written by Dennis Sowards

Leadership

Jeffrey Gitomore’s has an interesting viewpoint on leading in 2012. Note that when he writes about “salespeople,” that in reality, he is referring to you.

“Next year might be the year. If it is, will it be yours?


“At this moment it appears as though the economy is gaining a little momentum. The automobile industry is in slight rebound. Interest rates are so low that homebuyers might actually top refinancers. And corporate America is finally letting up a little on their purse strings.

“BEWARE: Banks are still reluctant to lend to people, the stock market is still up and down, and world uncertainty has become more uncertain.

Within the framework of this opportunity, there’s one thing you cannot do: WAIT.

“The days of waiting to see what will happen, waiting to see when things will return to ‘normal,’ and waiting for a sure sign of recovery are over. You cannot afford to wait any longer. You cannot afford to ‘get by’ until the economy is once again safe.

“The definition of ‘safe’ has pretty much been eradicated from the dictionary. Unless someone is safe sliding into second – and even then instant replay may prove them wrong.

“Below is a list of actions for you to take right now. Not after the holidays. Not after the New Year. RIGHT NOW!

“Train everyone in your company on positive attitude. It’s an undeniable fact of business that attitude is the biggest success driver – both internally and externally. REALITY: If sales pick up and customers begin to call and your internal service isn’t the best on the planet, you will lose. And worse, you’ll blame it on the economy.

“Visit your top 10 customers. Talk to them about their situation. Talk to them about what they plan to do next year. Make an informal partnership offering. Make part of your relationship their success. And make a commitment of both time and people to help make their success your reality.

“Huddle internally with your key people. (Especially your key financial people.) Make sure you’re safe going into next year and budget whatever you can to promote yourself. Invest in the Internet, invest in service training, invest in social media, and invest in your salespeople. Now is the time to put your business money where your business mouth is. Waiting will give your competition an extreme competitive advantage.

“Get your salespeople mentally and physically ready to go on the offensive. If you’re like most companies, you’ve probably cut some of the lifeblood needed to make your business stand out from the others. You’ve slashed training, you’ve slashed marketing, you’ve slashed advertising – and you’ve cut your staff to where most employees are doing what two employees used to do. These cuts have had an adverse effect on sales and morale. IT’S TIME TO REINVEST IN SALES AND THE SALES EFFORT.

“Employ manners that your parents taught you, and deploy gratitude internally and externally. Your parents taught you what to say, and I’m challenging you to be grateful for it and share your gratefulness with others. Make certain that your internal and external customers know the sincerity of your appreciation for their loyalty and their business.

“What I’ve just given you is a list of actions that will help you succeed - especially in the coming year. Please pass this message on to everyone in your company - starting with your CEO and ending with every person who may not believe that they can make a difference.

“NOTE WELL: I’m not asking you to be a team, rather I’m asking each individual to take responsibility for their thinking and for their actions.

“It is my hope that you begin taking these actions today.”

Here are a few more ideas I suggest you consider as you plan for 2012

Play to win - bid smart. Look at the jobs you are bidding. Many contractors are bidding anything and everything that comes along. Some of those jobs you will lose if you do win the bid, not necessarily because your bid price is too low, but because your expertise isn’t in that type of work. If you can’t successfully deliver the job done right the first time why bid it and hope that things will be different? Bid smart.

Involve middle and front management.If they were not involved in your planning for 2012 then now is the time to involve them in the deployment and get their buy-in. They need to set their goals in support of the company strategy. Keep it simple. Determine what your vital few priorities are for 2012. Communicate those key priorities and ask your middle and front line management to identify the actions they will take to support the priorities.



Follow up. Many plans look great at the start but are forgotten within a few months – just like New Year’s resolutions. Establish a regular time (monthly) to review progress and make course corrections. If people know they are accountable to do something and report progress they will act. If senior management does not show it as important by their words and agendas, everyone else will act the same.

Keeping Score

A recent survey * found that 70% of managers say they do not receive the data they need to make good decisions. Do you?Some of the reasons they cite include:

• Data is scattered everywhere – some is in the accounting system, some is in excel spreadsheets and some is reported on hand-generated reports. This is so typical of most contractors.
  
• It is hard to judge performance of many functions, especially support functions.Do you have reports that show how the shop, warehousing or accounting is really performing?
  
• Data is usually too late to make timely decisions. Many contractors take two weeks to close their books to see their financial performance for the past month. It should take a few days at most. One contractor I’ve worked with has it down to 48 hours.

I would add the following reasons for why managers do not get the data they need:

• Many executives are not clear on what data they really need. We measure many things in construction, but few executives have identified their critical success factors and fewer still measure what the customer feels is important.
  
• Most – make that almost all- accounting systems allocate overhead costs in ways that meet GAP (accountant’s rules), but not in ways that help drive effective decisions. One contractor allocates the cost of the company’s office building to the service function. This may work well to help recover the costs in the prices set for service charges. However, it can also cause other office functions to see space as “free” and not manage to their needs. Managers need to clearly understand the difference between direct cost and allocated costs.
  
• GIGO applies. Garbage inwill make for garbage out. We need to ensure that we have reliable input.
  
• Redundant systems are used to collect data. Often a PM will have his own spreadsheet to manage his project’s cost while the company has invested in a project cost accounting system. Duplicating data is waste. One mechanical contractor’s shop tracked and reported data for several years only to find out the report was no longer necessary.

What to do about not getting the data needed? Take time to “sharpen the saw.” Invest some time analyzing what reports are generated and really used. Start by defining the company’s critical success measures (CSF) or as some call them - key performance indicators (KPI). These should tie to the company’s purpose (vision & mission) and tell how the company is performing in the areas of customer loyalty, employee loyalty, operations, and finance.



Next, make a list of all reports that are used at the executive level. List both hard copy and on-line reports. Discuss with each user what data he/she actually looks at and determine how (or if) it aligns with the CSF you have identified. If it doesn’t connect, then why measure it? Look at what data is not used but is still measured, as well as what information is missing. Redefine and align all reports and data to fit the defined CSF.



Move to the next level of management and repeat the analysis process. Look at what should be measured and what is being recorded for each level in the company and how aligned it is with the overall CSF. A foreman or superintendent may need detail information on work, but it should always tie to corporate performance indicators. All data should be used to make improvements, not just measurement for the sake of measurement. If one doesn’t analyze it - why measure it?



Yes, this type of analysis takes time. It can be done quicker with an outside consultant. If you don’t do it, you are probably wasting time capturing data that is not useful and missing key information needed to evaluate performance and make intelligent decisions.



* Source of survey: IndustryWeekJan. 2010



Listen to an interview by Ted Garrison about measures in construction.

Learning Opportunities

You may be interested in attending one of these training seminars:



Dec 7, 2011 -Solving Your Business Problems and Keeping Them Solved Free Webinar - Sponsor: Kohler Co. and PHCC Educational Foundation. Here is the registration link through Go to Webinar:

https://www2.gotomeeting.com/register/623547090

Here is the link on the PHCC website that describes the session

http://www.phccweb.org/EducationEvents/content.cfm?ItemNumber=7789&navItemNumber=10130



Jan. 26, 2012– Leadership Skills for the 21st Century- Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details.



Feb. 21, 2012- Eliminating Treasure Hunts – Applying the 5S’s for Lean Construction - Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details.



March 22, 2012- Advanced Lean Techniques– Sponsor: P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details.



April 11, 2011 – Delivering Excellent Customer Relations – For Service Technicians - Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details



April 26, 2012- Designing and Achieving World-Class Performance in Construction- Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details.



May 9, 2012 – Lean in the Service World- Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details



May 24, 2012- Job Planning That Really Works- Sponsor – P.I.P.I. & 469 JAC – Phoenix, AZ - contact Cathy Mayeux at cmayeux@pipetrust.org for details.



If you are interested in bring one of these workshops to your company or association, please contact Dennis Sowards.

Thought for the day

“The only job security in the world is a happy customer. Companies can’t provide it. Only customers.” - Jack Welch



For more information about the High-Performing Contractor assessment process contact Dennis Sowards at 480-835-1185 or at dennis@YourQSS.com (see www.YourQSS.com)



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UPCOMING EVENTS

Dec 7, 2011 PHCC Webinar

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