Business Building Blocks That Work!

by Marcy Marro | 1 July 2020 12:00 am

I spent several days working with Lang. I observed his systems, operations, people and management style in progress. His management style includes daily job tactical early morning meetings to discuss immediate job issues, weekly manager meetings to review every job’s performance, and monthly crew meetings with the foreman and field workers to talk about safety, quality and job productivity.

Who Do Your Employees Work For?

Lang’s business philosophy is people don’t work for your company, you or their boss. They work for themselves! Employees go to work to earn money for themselves, not the company owner. You’ve heard the expression most workers often use: “No problem, I get paid by the hour.” When you hear this phrase, you understand it to mean: it doesn’t really matter how long the job takes, because it really doesn’t matter to them. When people get paid for what they produce, they produce more. And when they produced more, your company can do more and do more with less.

When the owner keeps all the profits for themselves, this demotivates your workers. This common practice gets the workers thinking and talking about how rich the owner is getting when they do all the work. Therefore, workers don’t feel the need to pull together and accomplish more than necessary. The only way to win any new work under this scenario is to lower your markup and make less money than you need to prosper.

BIZ-Building Blocks

1. More Efficient Workers Should Make More Money

Compensation systems, which only enhance the company owner if the workers produce more, are counterproductive and don’t work. When workers benefit by doing more and going beyond their normal efforts, they’ll likely produce more. Unit-based pay is simple. It requires you to take your bidding rates for labor and break them down into how many hours it takes to install what you do.

2. What Gets Measured Gets Done

Do you want your field workers to work hard and stay busy, or get a certain amount of items installed by the end of every day? When your workers don’t know how many units they need to complete every day, they just work at the same pace to satisfy their boss and keep employed. When they know exactly how many units must be installed every day, they will do whatever’s necessary to get it done. To make this happen, they need to know the number of items they must complete every day.

This system requires the foremen to count actual installed results at the end of every day, and keep their project manager, superintendent and crew informed of daily progress until the job is finished. This system keeps the field crew and individual workers accountable for achieving results. As the workers only get paid for what they install, this keeps jobs on budget with very few labor overruns. And over time, the overall labor bid rate gets more and more competitive as crews figure out better and faster more efficient ways to build projects.

3. Safety and Quality Count Too!

One of the top priorities of any successful contractor is to maintain a safe working environment for the workers and produce quality work. Working at a fast pace motivated by a pay for performance system would not work without a component including provisions for maintaining safety and quality. Each of your jobs need a designated safety person in charge of ensuring the safety program is maintained. When the program works, there are no lost time accidents or safety violations. For these expected results, the crew is compensated accordingly. But if there are accidents, violations or costs associated with safety problems, the entire crew’s daily pay is reduced to cover these issues. This also keeps each crew focused on working together to ensure safe job sites.

Incentive pay programs also reward crews for no callbacks, no punch-list items, and no closed jobs repairs. Getting people to care about doing these little extra things generate big returns, lowers field costs and makes your company more competitive. When there are quality issues, the same crew that built the project is required to go back and fix the problem. These repair costs are then deducted from the crew’s pay. This keeps the entire crew focused on doing excellent work at all times and reduces closed-job costs.

4. Drug-Free Workplace

Drugs and substance abuse hinders every employee’s ability to perform, can slow down the entire crew, or put the crew at risk when working in dangerous situations. Every employee is required to take an initial, back to work, and periodic randomly scheduled drug tests. If the workers fail, they have several options including looking for work elsewhere, entering a drug rehab program, counseling and then retesting. No exceptions.

5. Continuous Teamwork and Improvement

When your team pulls together, they will talk to each other and seek better ways to build, improve productivity, increase quality, avoid callbacks and perfect safety. Everyone benefits by helping each other and going the extra mile. Communication also opens up between the managers, estimators and field works as everyone is compensated based on actual results.

Implement and Learn From Others

Learning from other successful companies allows you to grow and build a better company. Another of Lang’s attributes is his involvement in contractor peer groups that meet several times per year. With other contractors talking about their business operations and challenges, he learns from other’s successes and issues. He also gets candid input for his management systems plus opinions and suggestions from other like-minded business owners. Now it’s your turn to implement some of these building blocks that work!

---

George Hedley, CSP, CPBC, helps contractors grow and profit as a professional business coach, popular speaker and peer group leader. He is the author of “Get Your Construction Business to Always Make a Profit!” and “Hardhat BIZSCHOOL Online University” available—on his website. Visit www.hardhatbizschool.com[1] for more information.

Source URL: https://www.metalconstructionnews.com/articles/business-building-blocks-that-work/

---