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November 27, 2006
This is a brand new concept but worth watching - www.greenbrim.com is attempting to build a marketplace where people can buy and sell accounting services. It looks like a specialized version of eLance which is a fantastic service for connecting freelance providers with projects you need done.
Currently Greenbrim does not appear to have many projects or providers signed up but the service is new - keep watching. The construction industry could definitely use more financial talent.
The Art of Layoffs in Construction
CFO Magazine ran a great short article called You're Fired! But Why? which points out a couple things that really apply to contractors.
The first major point is that only 74% of employees believe they were clearly informed of the reasons for their dismissal. This is a general survey - I bet the number is much, much lower for craft people in construction.
Our typical explanation is that people are "laid-off due to lack of work." I know I've done my share of these "lay-offs" and the truth is that only a few of them were truly heart-wrenching and fell into the category of: Market sucks, I feel like I failed to do my job and therefore you have to lose your job.
The rest of them fell into the category of: WOW - I'm glad that crunch is over and I can finally get rid of you because you have all the skills of a bad second-year apprentice!
In 1999 when out here in CA were were in the peak of the dot-com boom I recognized that part of the incredible labor shortage we were facing had to do with this practice. Looking around the crew I saw many people who had been through dozens of employers and always just had to "move-on due to lack of work."
No one had ever sat down and explained to them the basic concept of:
The weakest players usually get laid-off first.
This is a fact in construction and in life. How much better-off would the industry be if every time we laid someone off we took the time to explain to them where they were strong and where they were weak? What if we sent them on their way with a recomendation for training to help them improve that weak spot?
Schools and and the entitlement mentality that many people grow up with do not lead to deep self-reflection and with so many employeers basically lying to people about why they are being laid-off it actually keeps the industry from improving.
In January of 1999 I decided to change this for myself. On one job I had about 20 layoff checks to hand out and instead of doing it quickly at the end of the week like I had done in the past I sat down and spent several hours making a list for each person so they knew exactly where we felt they were weak and where they were strong. Working with the job foreman we had conversations with each and everyone person.
It was emotionally very hard for us to do - and it was emotional for the employees. There were tears - for many you could tell it was the first time they had ever been confronted on their performance.
What if everyone in the industry had started doing that 7 years ago? Do you think our workforce would be a little better developed by now?
This brings us to the second great point of the article - the concern that if this is done then past employees will come back on the company with wrongful terminations lawsuits.
If your HR Manager is giving you this advice simply fire them and find a real leader for this position.
As the article points out the opposite is true.
First of all, people sue people, not companies.
Secondly, if employees are confronted up front about both their good and bad performance and given a method to improve then there will likely be negative emotions at the moment but the next morning they will see that you really did care about them and their attitude will improve.
When employees are simply laid-off the intial emotional reaction may not be that bad but the next morning they will start to think about it. Why did YOU let them go? YOU must have been playing favorites. YOU must have had it out for them. As their job search progresses they will continue to boil inside - YOU did this to them.
That is where most of the lawsuits come from - not from the employee that you really helped out.
November 24, 2006
You are standing where you are today because of things you did or did not do in the past.
What you do today will determine where you will stand in the future.
Tomorrow will never come and all the money in the world will not let you re-live today.
Make one more phone call.
Send one more e-mail.
Have another cup of coffee and write down some details about that idea you had this morning on the way to work.
Develop that marketing piece.
Start that new business.
Spend some time researching that new technology you read the headline about.
Go home early and spend two extra hours with your family.
Whatever you decide to do - just do it. Do it with urgency. Do it 100%. Do it with passion.
How To Lose & Then Regain A Customer
November 19, 2006
I spend a lot of time traveling between client sites that are a ways away from my office. The two places I usually choose to spend that time are Starbuck's and Borders Bookstores. They both have T-Mobile and are nice places to work. If I have a long period of time I will usually go to a Borders and when I get stuck or just need a break from what I'm working on I will walk around and pick up magazines, books, CD's, etc. I can also get something to snack on and the all-important coffee jolt to get me through the day!
Being a lover of knowledge I spend a ton of money on books every year. The tactical ones I know I want are usually ordered on Amazon for the convenience. It's the things I see when wandering around that I will buy at Borders or in the airport.
Now I'm sure that I'm not alone in this and there are hundreds of thousands of professionals who have similar habits out there. I also bet that these people make up the majority of the profits that a book store sees because of the average purchase size being $100+ and frequency several times per month.
So, what got me irritated?
In the last few weeks I've been having several meetings near a Borders in Sacramento in a higher end shopping center and down the street from CSUS campus. My guess is that there are a higher percentage of people like me in this area than in other areas - just a thought.
What do I need when I go to a Borders? Just a table and power outlet. Give me those two things combined with snacks and coffee and I'll likely spend $50+ between books, magazines and food over the course of a couple hours.
What does this Borders have? No power outlets except one in the corner where they moved all tables away from and put a sticker on it saying "DO NOT USE - NO LAPTOPS" Basically "GO AWAY AND DO NOT GIVE US YOUR MONEY!" Last night after my laptop dies but a couple hours before I was going to leave I still wanted to buy a few things that I was looking at. After standing in line for 10 minutes I gave up and left. They got a grand total of $1.90 for a cup of coffee.
This morning I went to another, friendlier Borders and they also only have one outlet but they have put a long table right next to it, added a second outlet on the column and even put up a sign saying that this table was "Reserved For T-Mobile Customers."
What a contrast! Well, I got a coffee - then a water - then a snack - then got some work done - then left buying $90 worth of books.
I'm sure that the few dollars it cost them to add the second outlet in next to the existing one so that 4 people at a time could take advantage of the one table has come back to them many times over. It made me think about how much money the other Borders saved on electricity from pesky people like me "stealing" their power.
But wait - the story gets even better. Back to the first store. When I was working last night I saw what looked like a management team walking around doing inspections and generally looking to improve the place. I asked if they truly wanted my opinion - and they actually said yes. I told them everything I stated above and they nodded and thanked me for my input.
Honestly I figured it was the usual worthless "we want your opinion as a customer but not really" thing that is so common in today's business world. What amazed me is that tonight I returned to that Borders and in less than 24 hours they had moved a large table next to the outlet!
Simple fix - and as I write this I'm sitting here next to another business owner and we both have a stack of books we are getting ready to buy.
Are you doing simple things that seem smart (like saving pennies on electricity) but keep your customers from spending as much money as they can?
Do you take customer feedback and turn it into action that quickly? I am confident that my purchases this evening will more than pay for not only the electricity that I used but also for the labor it took to get this table moved into location.
I bet you can look around your business and find at least a dozen things you do that irritate customers just a little.
I bet you can solve all these problems for pennies.
I bet that the improved customer satisfaction will show up on your bottom line.
Software, Features & Design
"Customers are expert in knowing what they need to accomplish, but not in knowing how software ought to be designed to support their needs. Allowing customers to design software through feature requests is the worst form of disaster by committee." - Stephen Few from Information Dashboard Design
I run into this constantly when it comes to the design of project management or estimating systems. Honestly it is the fault of both the customers and the software designers. The customers "demand" features or else they won't buy the software and the software maker is trying to run a business so they attempt to build the feature into the next version.
I just started reading this book after reading about it in a post by Kathy Sierra that I talked about previously. I am only on page 35 and love it. The pictures of various dashboard displays on the first pages were worth the price of the book alone.
It is interesting to see the differences between dashboards that were built by software companies versus those built by end-users like the "Digital Cockpit" that GE uses. It shows how wide the divide is between how a software engineer thinks versus a manager, executive or business owner.
Business Growth & Transition
November 18, 2006
Great article in Entrepreneur magazine about 6 steps you can take to help your business make transitions - called Lost in Transition by Carol Tice.
Even though this article is geared toward the ultimate transition of selling the business many of these steps will make any business run much, much better.
Notice that #2 on the list is to document processes! This is hard, boring and tedious work - and well worth every penny and minute you spend on it.
If you don't think that getting your team together in a conference room and "agressively discussing" the details of exactly how a bill or change order should be processed for several hours is worth it then you are destined to fix billings and change orders each and every month - forever!
What A Real Entrepreneur Does
November 14, 2006
The other night I was having dinner with Rodd Palon from 2 Rivers Demolition and we were talking about success in business and how many times the correct answer only comes to you when you DO NOT have everything you need to get something done whether that is money or people or the myriad of other things people think they need.
Innovation often comes because people lack resources, not because they had too many. Seth Godin makes this point perfectly in his recent post called When To Start? It's simple - don't worry about the resources and having everything perfect - just do it now!
Look at your business - what resources could you take away to help make your team more innovative? Could they do with one less vehicle? Could they get by with one less person on the crew? This is not about cost-cutting, it is about having people come up with innovative solutions that produce the same or better results with less resources.
Process Documentation For Contractors
November 12, 2006
Construction Business Owner magazine is almost done with a twelve part series called Entrepreneurial Excellence by George Hedley. One underlying theme of the articles is that if you want a successful business you need to create systems for what do and document those systems. A couple of the great articles from the series include:
If you can not describe what you do as a clear process and then document that process so others can do it then you are not building a business, you are just over-extending yourself. It is probably showing in the amount of hours you work and stress you feel.
Helping contractors streamline and document their processes is one of the most challenging but also most rewarding services we provide.
Hope you enjoy these articles. We have an article coming out in an upcoming newsletter that addresses the subject of process documentation. If you are not already receiving our newsletter you can signup here.
Graphics and the Communication Process
Kathy Sierra makes some great points about how to use graphics to really communicate a point. I instantly bought several of the books she describes and all the points really hit home.
Whenever I have worked on designing a communication I always think about the graphics first and the words second. If the idea can not be clearly communicated with a flowchart or other simple illustration then no amount of words either spoken or written will likely get the point across.
Being in construction I'm sure everyone can relate - could you imagine building a project based on the written specification manual? We could all imagine building a project and filling in the details based on a few good elevation drawings. The interpretation from person to person on the details would vary but only slightly. There would be far wider variation if the same project were described in 2-3 written pages with no pictures or illustrations.
You will have far better results from your communication efforts if you spend enough time thinking of a simple way to illustrate it on a slide, half a page or full page.
Use words to fill in the details. If you are going to skimp on anything skimp on the words.
If you are designing a process for the company such as RFI's or Change Orders spend time on a flowchart illustrating clearly who is responsible and what the ultimate outcome should be (cash, customer satisfaction, quality, etc.)
Creating this illustration and getting people to buy into it is the heavy lifting. Filling in the details with words is just the icing on the cake.
Negotiated Construction Contracts
In a recent article titled Negotiate More Contracts! in Construction Business Owner magazine George Hedley makes some excellent points about why negotiated contracts are far better than low-bid type contracts.
While everyone probably realizes this by now it is amazing how few contractors really embrace this. I see a lot of contractors talking about it, wishing for it but still continueing to do the same thing over and over.
Shifting from a "basic service provider" mentality to a "value-add partner" mentality is difficult. It will involve pain. The pain is worth it in the long-run.
Beyond providing some good ideas about why negotiated contracts are better, there are some great tips for helping maximize the value in the negotiated contract. This article is worth reading for anyone in the construction industry.
Construction CEO's For Hire
November 07, 2006
Forbes recently ran an article called CEOs for Hire on ForteCEO which provides interim CEO's for growing businesses. ForteCEO lists construction as one of their key industries. If you are in need of some leadership on a short-term basis to get your company organized or to the next level and you need more than what a consulting firm can provide this may be a potential solution.
Standardized Construction IT - Coming Soon...
November 06, 2006
Article points out the current advancing status of standards for construction CAD systems. Once all CAD systems can talk to each other there will be billions of dollars of savings annually. Hopefully these standards begin to flow down to project management systems for exchanging RFI, transmittal, submittal and change order data in the near future.
Dialing For Growth
A couple weeks ago Jack and Suzy Welch gave some great advice for growing small and medium sized businesses in their weekly column in BusinessWeek.
There is very little literature out there about medium sized, growing businesses. Most books are about either huge corporations or about startups. Jack and Suzy suggested simply getting out the phone and calling other businesses. Most businesses are very open to sharing - you just have to ask the question.
I see that in the construction industry all the time - contractors are very local and if you want to learn something just find a contractor across the country who is doing something cool. I almost guarantee you that they will talk to you and help you out in any way possible.
Download the MP3 podcast of the article for more details - or just pick up the phone and start calling people!
Feedback Systems & Customer Service
November 05, 2006
Saw this sign / system installed in Chicago airport and thought it was a good idea for a system that provides rapid feedback and makes customers feel involved in the process - also, the restroom was VERY clean!
What automatic feedback systems could you incorporate in your company? Could you make them involve your custommers? Remember that communication is huge - customers want to be heard.
It's All About Communication
November 04, 2006
1. For a presentation on integrating accounting and operations I needed to get some tabs printed for the binders. I sent the order to Kinko's and they consistently failed to communicate receipt of the order or status. When I went to pick it up it was not even started. For all their talk about improved project management practices after FedEx bought them they failed in a few key areas. Netflix has built systems to specifically address the communication issues - they notify you when they receive a movie and when they do anything with the movie including shipping it. Couldn't Kinko's do the same thing? Why not send a confirmation e-mail from the store that will be filling the order stating that the order was received and that there are no problems. After that what about an e-mail when the project goes into production - possibly even with a note that the project will be done on-time. Finally send out an e-mail or give me a phone call when the order is complete. Do your project managers communcate well with their customers?
2. I tried to get home early from Philadelphia by taking a late flight on US Airways. They had problems getting off the runway. No big deal - problems happen. It is how you deal with problems that makes the difference on whether you keep a customer or not. Well, they failed completely. They showed no signs of "hustling" and that is what people want to see. This is why Les Schwab has people run to your car to change the tires, not walk. Next they failed to do anything special to make up for the more than 1 hour delay. Most airlines would have given away free drinks or something else to keep the customers happy during this period of time. I understand that you are trying to cut costs and I will help you out - in the future you will NEVER have to bear the cost of serving me because you will be the last airline I ever choose for travel. When we were coming into Las Vegas they could have communicated to find out connecting flight / gate information notifying those passengers who would completely miss their connections and helping those that still had a chance. They completely failed to communicate anything and even at the gate they failed to demonstrate any "hustle." Finally once in Las Vegas with a missed flight I had to go to multiple locations to get re-booked, get my luggage and get a hotel voucher. Again, one piece here is communication - even with problems customers are forgiving if they are communicated with. A second is the process for serving the customer. I am sure that a very highly paid consultant helped them design the "customer missed flight" process and it is very "efficient" for US Airways to have the process completed by four different people in four different parts of the airports making dozens of passengers walk from one location to the next at 2AM. What if you mapped out every process in your company that touches a customer? How seemless does it feel for the customer?
3. The next morning after a couple hours of sleep I had the opportunity to finally fly home (arriving 2 hours later than if I had just flown on United) and got into a conversation about contractors with Paul who was sitting next to me. He discussed how he had built his own backyard serving as the GC. What was his biggest complaint? Poor communication on the part of all the contractors. They did not show up when promised. They did not complete punch list items in a timely manner. They would show up at unscheduled times and expect to do work.
Customer service begins with communication. Do not ever underestimate the power of a phone call or e-mail. When in doubt over-communicate. Communicate even if it is to say you have no new information. It will make your customers happier and happier customers pay their bills faster!
If you don't serve your customers you will have fewer to serve and that will keep your costs way, way down! Spend a few extra minutes and a few extra dollars serving customers and you will be rewarded.
Construction IT - The Next Level
Most likely you run your construction company with dozens or even hundreds of spreadsheets and forms designed for a specific purpose. This method works good for smaller organizations but as your company grows the seperate spreadsheets kept by each project manager quickly become unmanageable.
For instance if you have 25 projects in-progress it becomes very challenging to get a real good feeling of the status of changes throughout the company.
OK, so the spreadsheets are not working - but there does not seem to be a single solution that really addresses all of your companies needs. What do you do?
Take the approach that Pulte Homes did and just bite off one thing at a time. Database and web development have become increasingly affordable. Pick just one process like change orders and integrate it into a "one-company" system with all project managers feeding it and drawing information from it.
One little process automated at a time will help you define your company as a series of processes and lay the groundword for you to select that "one system" in the future.
Philadelphia - Forefront Roadmap Class
November 01, 2006
In Philadelphia today teaching a class on Integrating Operations with the Forefront Construction Suite for Dexter+Chaney. I love being part of these classes because of the fantastic ideas that come up when you get both accounting and operations together thinking about how to improve the company.
Where Are The Construction Workers?
Every company I talk to seems to have three things in common -
1. Their business is different and harder than any other construction business and much, much harder than simpler businesses like manufacturing.
2. Their hometown sports team is the best!
3. They always ask where the best people are hiding at.
Well, to address these questions in order -
1. ALL businesses are hard - if one business were substantially easier than another everyone would be doing it!
2. Of course it is.
3. Get a clue - they aren't hiding anywhere. They aren't there and the situation is not going to be getting better. With the current level of skilled trades people there is nothing that is going to magically fix the problem. The only thing you can do as a company to excel in this environment is to focus heavily on organizational planning that will provide a clear and rapid path from an entry-level position through a productive, skilled team member. Focus on training both at the craft level and at the management level to grow good crew leaders, foremen and project managers.
New Jersey - BAMCO, Inc.
I just got back from a long but exciting day in New Jersey visiting with a wall panel manufacturer and installer, BAMCO, Inc. I got there a little early in the morning and had a great time having coffee and doing a little thinking while sitting in this beautiful park. They don't have the changing seasonal colors like this in California!
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