Quality Matters - 08/04/2008 (Plain Text Version)

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In this issue:
Leverage Your NHQ Certification with Insurers and Builder Clients
Streamlining
Survey Findings Reveal Changes in Builder Business Ops, Promotion, New Product Purchases
IAS Board of Directors Wowed by NAHB Research Center Facility
Shining Light on Latest in High-Tech Solar Panels
Quality Matters to Me
National Housing Quality Program Welcomes Newly-Certified Trades, Suppliers

Streamlining

Explore how streamlining business operations and construction procedures might help position your company for an easier rebound when the market turns around...

(This article originally appeared in the November/December 2007 issue of Virginia Builder and is reprinted here with permission.)

As a result of the soft housing market, most builders have had to become “lean”– they’ve had to downsize, cut back, and reduce their organizations to the bare-bones minimum. So what’s next for builders? Eventually, the light at the end of this tunnel will become more visible and we can start building again. Maybe we should start planning now and take steps to prepare for the turnaround that we know is bound to happen. After all, everything that goes down must come back up.

We shouldn’t plan on going back to the way it was – too much of everything – people, inventory, and land. I suggest that you look at your organization and plan on rebuilding in a streamlined manner. A streamlined operation is one that can grow easily and effectively. You can build 20 or 200 homes with the same organizational structure. Here are 10 steps to streamline and prepare your organization for the market rebound:

Processes – Your past and present processes can be streamlined for greater efficiency. Start with your existing process flow. Look at your organization’s activities and flow chart. Where can you rearrange activities in order to be more effective with less people and more control? Look at your build time. Can you cut out a few days here and there? Longer build time costs you money in salaries, overhead, interest, insurance, etc. For more assistance, you can find several computer programs that will make it easy to develop a process flow diagram of your existing operations.
Responsibility – We often give responsibilities to someone because of their experience, not because they are the most qualified. Look at your processes and assign responsibilities according to the processes, not the individuals in the organization.
Documentation – Document what is being done or should be done. You will need to hire people when the market starts to rebound. Documentation will help you train new employees on how you want your organization run. Documentation includes job descriptions, policies and procedures, job readiness and job completion, in-process inspections, forms, and a checklist. Documentation and adherence to it will ensure that you deliver a quality product each and every time.
Roles and Functions – In many instances, people in your organization will have more than one responsibility. However, when you can split the job, do it in a planned fashion. When your processes are well defined, so are job responsibilities. Your job descriptions should be written in a way where each job supports or supplements all others effectively.
Communications – Eliminate silos. What does this mean? Too often, different parts of an organization do not communicate well with the others. In some organizations, sales people make promises to customers without telling operations; they work in silos. Eliminate the silos and force communications through your integrated processes (Step 1). Poor communications often lead to dissatisfied customers and reduced referrals.
Customer Care – Fine tune your customer interface processes to make the customer experience not just a good one, but an excellent one. This means that at closing, 30 days after closing, and one year after closing, the customer will still say what a great builder you are. An informed customer will call fewer times for assistance after closing, reducing your customer care costs. Many successful builders have fine tuned their customer interface process and found ways to make the entire homebuying experience one of learning and enjoyment for their customers.
Trade Involvement – Be sure to get your trades involved in your processes. Ask them for their input on both products and processes. Make them deliver a consistent product each and every time. Have them work together to improve communications, job readiness, and job completion procedures. Keep a clean jobsite, and deliver on time and in a safe manner.
Select Your Trades for Quality - The lowest price is not always the best way to go. Actually, it is rarely the best way to go. As the old saying goes, “You get what you pay for.” Though price is important, it should not be the primary factor in selecting a trade. Experience, dependability, and consistent quality will ultimately cost you less than the lowest bidder. Seek out NHQ Certified Trades. Their management systems will provide you with the right price and a standing commitment to quality.
Benchmark – Look at what other builders are doing and look at other industries for ideas that can work for you. Some builders have joined NAHB’s “Builder 20” groups to share ideas and practices. Joining groups is a good way to learn and improve what you do, but only if everyone in the group is willing to contribute and share best practices. For the past six years, I have been a judge for the NHQ Awards. I have found that many builders apply to the NHQ Awards program not only to achieve an award, but to get feedback on how they are doing and get ideas on how to improve.
People – Take care of your people. If you want them to be loyal and do an exceptional job for you, you need to be loyal and go out of your way to make them feel important and an integral part of the team. This needs to happen not just once in a while, but all of the time. Ask them for their input, and check on how things are going on a regular basis.

Serge Ogranovitch is a senior partner and founder of The Potomack Group, an international management consultant firm. For the past several years, he has been involved with the housing industry as a judge for the National Housing Quality Award and has worked closely with the NAHB Research Center for the development and implementation of the NHQ quality management systems. Serge has been a frequent speaker at the Benchmark conferences and the International Builders’ Show.