High-Performing Contractor NEWSLETTER Aug 2007

Strategic Planning

Soon fall will be here and it not only signals a change in weather and the start of football season, but it is also the time to start considering plans for 2008. Doing effective strategic planning is one characteristic that separates the men from the boys. High-performing contractors do strategic planning, most other contractors feel they are helpless victims of their market’s economy and can’t plan.

The strategic planning process is not complicated nor does it require weeks of off-site meetings and endless documents. In a nutshell, it can be described as “PDCA.” PDCA stand for

Plan – plan what we want to do

Do – do it – take action

Check – Check to see how we are doing

Adjust – Make adjustments to make sure we are still on course

The strategic plan should be simple. It starts with the strategic purpose of the company. This is the vision, mission and scoreboard for the company. Some people call this their True North, meaning the true focus of the company when making any decision or taking a course of action. The next part of the strategic planning process is identifying two or three Key Actions to do in the next year to move towards True North. These Key Actions need to be clearly defined and measurable. By measurable, I mean, we know when we have accomplished them.

The Do part of the PDCA process is the real work because something must happen or change to make improvement. This is doing the Key Actions. Sub-tasks may need to be defined for each Key Action. For example, if the action is to start doing work in a new city, the sub actions may include:

Setting up an office and staffing and equipping it

Visiting local contractors and owners to introduce the company

Developing relationships with local union leaders to ensure that you can get the skilled workers when needed

Understanding local licensing, codes and tax requirements

One person will probably be the lead on this Key Action but he would need to delegate various sub-tasks to the appropriate knowledgeable experts within the company.

Reality checks need to take place at least quarterly. In the Check part of the PDCA process, two basic questions are asked:

  1. Are we following our plan?
  2. Is it working?

If we are deviating from the plan we are most likely deviating from True North.

Adjustments may be needed just like detours are sometimes required while traveling to a destination. But the detours to our Key Actions must be done within the context of the where we are going and in a consensus building approach. Random efforts by maverick project managers cannot be allowed. If our vision is to be the best mechanical contractor in the southwest and our goal is to expand into the Tucson market in 2007, looking at a job in Orlando, is not heading us to True North! The job in Orlando may look very profitable and there may be strong personalities that want to do it, still it is a great deviation. Companies need to stay the course.

The strategic planning process can work to elevate an average contractor to a good performer. It will take a good performer and make it a great one. Contractors who feel they don't have the time or resources are kidding themselves. It is an investment they cannot afford to miss.

Where is your True North? Does your team know what it is? Are you headed there? PDAC it.

Customer Focused - Learn to learn as an organization

World-class companies that show organizational learning will:

provide greater value to customers;

identify new internal improvement opportunities;

reduce errors, defects, waste and related costs;

improve responsiveness and cycle time performance;

increase productivity and effectiveness.

In construction, learning is going on, but not learning as an organization. "I haven't seen a new mistake made in this industry in the last 10 years," is the way one owner put it. We just keep making the same ones!"

Most of us learn from our mistakes so we don't repeat them, but few contractors have been successful in learning how to learn as an organization.

I define a learning organization as one having systems and processes in place to capture lessons learned from both positive and negative experiences and jobs. It is able to deploy the information to its people and accelerate learning so other employees don't make the same mistakes and so they can replicate what worked.

Here are two methods any contractor can use to start creating learning opportunities in your company.

Punch lists. Almost all jobs end with a punch list. Once the punch list is completed, it usually is filed with all other project documents for that job. Those involved in the punch-list work may learn from doing the corrections and do better on the next job. Instead, why not collect copies of all punch lists and periodically look at all the lists? Look for items that are common to many of the lists. Look for patterns.

Complaints. As with punch lists, complaints represent opportunities to spot trends or common problems. When viewed individually, each complaint is unique. But when viewed as a group of all complaints received for the past year, different issues or common problems can be discovered. This, of course, assumes the company has a system in place to track complaints.

Source: Learn to Learn as an organization by Dennis Sowards, Contractor Magazine, June 2007. Read the full article.

Employee Focus

Key Indicators that you really value your employees

Managers often say that their employees are the keys to success but do we walk the talk? Here are some questions that indicate if we are doing what we say:

Do you measure employee satisfaction annually and act on the top issues?

To you have a budget for training? Do you use it or do you feel that having unspent training money is good budgeting?

Do employees participate in team/staff meetings where they are given the company’s vision and annual plans? Do they see periodically updates on the performance to the company’s strategic/business plan?

Do you ask employees for improvement ideas? How many ideas do you receive per employee per year? How many do you implement?

Do you include employee satisfaction measures in your company’s key measures of success (scoreboard)? What is discussed first when you look at the scoreboard?

Does your organization chart put the customers and front line employees on top with management in a support role?

If your employees are your most valuable resource, how do you show it? What can you do differently?

Turnover – keeping the best employees

Dr. Jeffrey Pfeffer makes a link between the increase in turnover in most companies since 2004 to the current practices of employers based on not trusting their employees. He cites that turnover of executives, salespeople, and production employees has nearly doubled and turnover of professional and technical staff is up about 70%.(1) Employee turnover in construction is generally accepted as a way of life. Some construction workers and managers are very mobile but many want to work for one good company and do a good job for many years. I believe that a big percentage of employee turnover in construction is also due to a lack of trust, not just the ups and downs of construction jobs.

What needs to be done? Dr. Pfeffer feels there is a connection between employees leaving the company and employees not being trusted in private issues such as email monitoring or personal use of the computer. While this may be a contributor, I feel the issue is more direct. When employees feel their ideas or opinions do not count, they are very likely to change companies. In construction we often treat front line employees like machines that check their brains at the front gate and can only work as directed. PMs usually try to listen and involve their field supervision in job planning, but field supervision does not do the same with their workers. Supervision cannot be a democracy where everyone votes on every decision, but foreman and superintendents can ask employees for their ideas and listen to them. Journeymen and even apprentices have good ideas about how to best do the job. Listening is a basic form of trust. Working with the employees to actually implement their ideas is another way to build trust.

Think of trust as a bank account. We make deposits by asking for input and listening and we make withdrawals when we ignore the employees or invade their privacy. As long as we are building the trust account we have a good chance of keeping our good employees. When we become overdrawn, we usually lose the good employee to our competition. Everyone has ideas for making their work better, most are small in return, but still build the trust account when accepted.

Try this – meet with groups of employees for breakfast. Let them order what they want to eat and while waiting for the meal ask for their ideas on how to make their jobs better? Say ‘thank you’ for every idea. Take notes on their ideas. Encourage them to implement the improvements themselves and follow up on the ones they can’t do themselves. Share the vision of where the company is going. Do this with all employees. Yes, it may take a year to do because you would be crazy to try to eat that many breakfasts all in one month. As employees feel they are heard, it builds their trust account, but only if management is sincere in listening and shows it.

The battle continues – keeping good employees. How can you build your trust accounts?

(1) Reforming Project Management Hal Macomber, Dec. 30, 2006

Training you don’t want to miss

You may be interested in attending one of these training seminars taught by Dennis Sowards.

Sept. 27, 2007 – Lean is Not a Fad Diet – it works in construction too! – Phoenix, AZ – Sponsor: PIPE & 469 JAC, contact Cathy at pipetrust@qwest.net

Oct. 22, 2007 – Lean Works in Construction – an Update of resent research - Las Vegas, NV SMACNA National Convention, contact: wwwsmacna.org

Oct. 25, 2007 – Performance Measurement - How to Use Measures to Manage and Improve Performance - Phoenix, AZ – Sponsor: PIPE & 469 JAC, contact Cathy at pipetrust@qwest.net

Thought for the day

If you can’t argue with your boss, he is not worth working for.

Captain Leslie Simon

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