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IN HIS BOOK "The Fifth Discipline," Peter Senge suggests that companies become learning organizations. He defined a learning organization as an "organization where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free and where people are continually learning to see the whole together."

Read it on the Contractor Magazine site

BY DENNIS SOWARDS , Quality Authority

Get serious about customer complaints

HOW DO YOU HANDLE customer complaints? Most contractors think they do a good job of resolving them. But when asked, "How do you know?" most owners/ CEOs respond, "I don't!"

Research shows that if customer complaints are resolved quickly, fairly and with a win-win approach, customer loyalty actually increases. But how does one know how well the company is handling complaints?

SOWARDS ON QUALITY

BY DENNIS SOWARDS , Quality Authority

You can be guided by scoreboard, dashboard

Most large companies and nonprofit organizations have boards of directors or trustees that govern and oversee their operations. Other types of boards are even more useful in running operations.

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BY DENNIS SOWARDS , Quality Authority

High-Performers Focus on Customers

ALMOST ALL contractors complain that they are already doing great in their operations, but they need more sales and marketing. Some even go a step further and suggest life would be wonderful if it weren’t for those darn customers! In most cases what the contractor actually needs is not more marketing but more customer focus.

In today’s market, everyone is looking for a differentiator. Having a world-class way of working with one’s customers is what sets the High-Performing Contractors apart from the rest.

The HPC views his customers differently. When he sees a potential or existing customer, he sees a relationship for life with changing needs that must be understood and fulfilled as well as communications that must remain current and open. He doesn’t see a customer as another sales conquest or a pain in the backside. Employees react to customers the way their managers see them.

High-Performing Contractors don’t want satisfied customers, they want loyal customers. What’s the difference? A satisfied customer is an opinion; a loyal customer is a behavior. A loyal customer gives us the next job! The pathway to loyal customers includes getting the requirements right upfront, establishing a trusting relationship, managing that relationship to keep the customers for life and measuring loyalty to ensure loyalty.

The HPC understands the customer’s specifications and requirements. Specifications are what the customer formally says he wants. Requirements may be perceived or spoken and represent what the customer expects the job to accomplish. The HPC goes beyond meeting specifications to make sure he meets the customer’s requirements.

In contracting, we waste money in bidding jobs we never get. Most contractors say they are successful on bids about 20% to 30% of the time and feel good about it. That means that 70% to 80% of their bidding resources are wasted! The HPC puts in place and uses systems to help achieve much higher bid success rates. These systems include:

Ways to communicate and meet with the customers routinely to “listen” to their needs and concerns and not to “sell” the customer. High-Performing Contractors have developed ways to translate the customer’s ideas of their needs into the contractor’s language. Customers are not always knowledgeable in the language of construction. The HPC listens through pre-job walks and post-project reviews with the customer. He listens to the customer’s complaints to hear not only what is said, but also what is really said between the lines.

SOWARDS ON QUALITY

BY DENNIS SOWARDS , Quality Authority

High Performers Put Employees First

WHICH OF THESE statements is true: Your people are your most important asset; nothing happens at work without people; your customers will never be treated better than your employees are treated; to your customers, your employees are your company.

Of course, all these statements are true. They are repeated in management books, articles and seminars. In fact, one person has said that more is written about human resource management than is known! If we know so much about people management, why don’t we do a better job at it?

A recent national survey by Quality Digest magazine found that employee job satisfaction is at a record low. Another survey taken earlier this year by CONTRACTOR’s sister publication IndustryWeek found that “only 27% of manufacturing employees are committed to their companies and plan to stay at least two years.”

The disconnect between what we know about how to treat employees and what we do lies in our basic beliefs about people. High-performing contractors stand for their employees’ success; they see their roles as owner/ leader of the company differently than do other managers. That differentiates the high-performing contractor from all others.

Consider how high-performing contractors treat their employees:

As equals or peers with different tasks to perform. If we see people as equals we treat them like we would want to be treated, and they respond accordingly.
As a resource valuable to the success of the company. One that your competition wants but can’t duplicate or clone (at least not yet).
Not as dogs, as a recent article suggested, though sometimes dogs are treated better than employees.
Not as expenses because employees will behave like expenses if treated that way.
Not as one big happy family because that makes the owner the parent and the workers forever the “children.” This metaphor no longer fits the contractor’s world. (We can have loyal employees but may never make all employees happy!)
The high-performing contractor has high-performing employees who not only do their job right, but also make improvements to the company. In the high-performing contractor’s world, “employees” include union and non-union employees alike.

Having engaged employees starts with hiring the right people and then developing them so they grow and feel they contribute to the company. The high-performing contractor selects his employees based on the skills and personal attributes that are most important to the company’s success.

Employees fit the company’s culture, not the opposite.

Once hired, the high-performing contractor has a training plan (for each employee) to help the employee learn what he needs to know to do the job. Training plans are put in writing so they become commitments for success. These plans are updated annually to reflect new company job needs and the employee’s own, and sometimes changing, career plans.

High-performing contractors do not give individual bonus or incentive awards. They use company-wide incentives to encourage and reward team performance. They know that individuals all work within a system and giving individual rewards causes counterproductive competitive behaviors.

SOWARDS ON QUALITY

BY DENNIS SOWARDS , Quality Authority

High Performers Manage Processes for Success

The fifth characteristic of high-performing contractors is they manage their processes.

All work is a process. We go through a series of steps to get our work done. In construction everyone follows a process — unfortunately, usually his or her own. Many managers think that since each project is unique, there can be no consistent processes in construction. Some feel it is dreaming to think that construction workers would follow documented processes. Few contractors are ISO 9001/2000 certified because of that thinking.

High-performing contractors are not necessarily ISO certified and don’t need to be. They have learned, however, to manage their work processes, not vice versa. They do not try to manage all processes, just the core ones that affect success. High-performing contractors define the core processes in sufficient detail so that anyone following the requirements will do it right every time. With consistent processes come consistent quality and predictable schedules leading to consistent profits.

While each job is unique, we go through the same basic steps to estimate it, to preplan and execute it, and to close it out and bill it.

Many contractors rely on tribal knowledge to do these tasks. They assume that the experienced workers will do the job right and pass the knowledge on to new workers. This is OK for about 70% of the work, but it is the other 30% where we lose our shirts.

I’m sure you all have stories of something missed in estimating the job, causing the PMs to scramble to break even. The punch list is a testament to inconsistent work and costly rework.

SOWARDS ON QUALITY

BY DENNIS SOWARDS , Quality Authority

High Performers Know the Score

QUALITY GURU Philip Crosby once told a story about a football team that lost its first two games in the season, both by a score of 14-13. The coach reasoned that the problem was that other teams had blocked one extra point attempt, while his team had blocked none. He figured that if his team had blocked two attempts he would have won 13-12.

The coach set out to make this happen. All week members of the team focused on learning the art of blocking extra points. They worked very hard and at the very next game they were able to block six extra point attempts. They celebrated and kept working on their technique. The team went on to block dozens of their opponents’ extra point attempts through the remainder of the season.

This team may have achieved its goal but lost sight of the more important goal — the final score!

In this, the sixth and last article discussing the High-Performing Contractor Assessment Model developed by the Sheet Metal and Air Conditioning Contractors’ National Association, we’ll talk about how to measure results.

Keeping score is important for high-performing contractors. They don’t lose sight of the importance of focusing on the right measures (also called metrics in this column) as well as the equally important analysis of measures to get to the root cause and to take preventable action. Construction is too busy to measure things for the sake of measurement.

High-performing contractors keep score for what they call their Critical Success Factors. Some call them the Key Result Areas. These are the areas or factors that the company must do right to be successful. These tie to the strategic plans (covered in the second article of this series). Metrics are associated with each success factor.

Typically, contractors measure Critical Success Factors in four areas: customers, employees, operations and finance.

The high-performing contractor addresses each factor in the same basic way. That is:

Identify a few key measures of success.
Set up a data collection and measurement reporting system.
Review and analyze the metrics regularly for root cause and trends.
Set goals and take action to improve.
Repeat steps 3-5.
High-performing contractors not only review the measures themselves, but they share these metrics with their employees. Everyone wants to know the score.

SOWARDS ON QUALITY

BY DENNIS SOWARDS , Quality Authority

Waste is everywhere but isn't inevitable

WASTE IS NOT desirable, especially in construction. To be more competitive we need to drive waste out of our operations. Most of us recognize waste in the form of defects and scrap. But this is just the tip of the iceberg!

In Lean Thinking, value and waste are opposites. "Value" is what the customer is actually willing to pay for the product or service. Economists define value as the ratio of the usefulness of a product or service to its costs. This includes the product's functions and features and it relates to the whole product, service or both. Costs include the price paid and also the cost in time and hassle in obtaining and using the product or service. Many customers, in today's fast-paced world, place greater value on convenience and ease of use than on the dollar price.

The seven types of waste are:

1. Defects This is a product or service that contains errors, requires rework or does not function as designed. For construction, this waste includes the wrong installation, defects in fabrication, punch lists and many kinds of change orders. Misunderstanding the customer's requirements or expectations can cause defects. Not meeting the required code is waste. Defects often come from not having and using standard processes.

BY DENNIS SOWARDS , Quality Authority

Waste is everywhere but isn't inevitable, part 2

THE SEVEN TYPES of waste, which we identified last month (pg. 50), are:

Defects This is a product or service that contains errors, requires rework or does not function as designed.
Over-production of goods We create waste when we produce more than the customer needs or is needed at that time.
Transportation This is the waste of moving materials or goods.
Waiting When people, equipment or product wait for other processes or workers to finish an upstream activity, it is waste.
Over-processing This waste happens when there are unnecessary or extra steps in the process or if there are any steps that do not create value.
Motion Employees moving around do not add value.
Inventory Material or parts not currently being used by the customer is waste. In construction, this includes uncut sheet metal and pipe, work in process and finished fabrications.
Waste is everywhere. This is not a statement of blame, just fact. Enlightened managers see waste reduction as a competitive advantage. The rest see it as inevitable and unpreventable! Start driving waste out. Declare war on waste. Be a waste buster. There are many simple techniques that can help the construction industry attack waste. Here are some of the basic tools:

The 5S's came from Toyota and are used to organize and visually control the workplace to eliminate waste. The 5S's are Sorting, Simplifying, Sweeping, Standardizing and Self-Discipline.

THE NEWSMAGAZINE OF MECHANICAL CONTRACTING

INDUSTRY NEWS Radical way to close the labor gap BY DENNIS SOWARDS QUALITY MANAGEMENT AUTHORITY Dennis Sowards's blog Read more « first‹ previous123 High-Performing Contractor E-mail: * Subscribe Unsubscribe Previous issues Upcoming events No upcoming events available more ©2006 Quality Support Services, inc - Dennis Sowards Office: (480) 835-1185 Cell: (602) 740-7271 Contact Us