There are three types of managers I consistently run into in the building companies I work with: the crisis manager, the problem solver, and the problem preventor. In many companies, one manager may even claim all three styles.
The crisis manager is constantly acting as a fireman, running with a fire hose from one crisis to the next. He jumps on whatever issue is the hottest (usually whoever is screaming the loudest), but is too busy fighting the fire to see what the problem is.
The second type of manager, the problem solver, not only fights the fire but also understands the heart of the problem and works on solving it.
The third type of manager, the problem preventor, not only fights the fire and solves the problem, but then takes steps to ensure that the problem doesn’t occur again.
Here’s an example of the three management styles at work: It is Friday afternoon and the plumbing contractor comes into the office expecting to pick up a check. The accounting department says it does not have a check this week for the plumber. The plumber is hot and bothered and states that his company will not be back to finish the job they were working on until they get paid. The job is really behind schedule, and the builder needs the plumber to work on it on Saturday. Here comes the crisis manager; he has the accounting department immediately write a check to the plumber. The manager is happy because the crisis is over, and the plumber will be on the job as planned.
But why did the plumber expect a check on Friday afternoon? The company has a policy that trade contractors are required to meet with the superintendent on Monday and present their invoices, which will be paid on Friday. The problem solver finds out that the plumber did follow the procedures. He met with the superintendent on Monday and presented the invoice. The cause of the problem is that the superintendent never got the invoice into the office. The problem solver not only wrote the check but found out why the problem occurred.
The problem preventor goes one step further. He finds out that the superintendent never got the invoice into the office because he put it in his pants pocket. At the end of the day, he forgot to take the invoice out of his pocket, and that evening his pants, along with the invoice, were washed and unknown to the superintendent the invoice was destroyed. The problem preventor takes the next step and develops a system that will prevent this problem from occurring again. The superintendent is given an envelope, which is kept on the dashboard of his truck, where he can put all of the invoices he receives. A procedure is established whereby the superintendent brings the envelope with invoices into the office every Tuesday. The problem preventor solves the problem and then takes the next step to implement systems so that the problem does not reoccur. Systems are the key to the problem preventor’s success.
Several years ago a builder in central Ohio, Wayne Homes, a company that had no land inventory and built on scattered sites, sold the company to a public builder for a large sum of money. Often when a builder is acquired it is because the acquiring company is looking for a land position in a marketplace. In the case of Wayne Homes, the company was attractive not because of its land position but because of its systems. Wayne Homes had systemized all aspects of its operations. If an extra nail went into a house, it would be caught by its system.
One of the keys to success in a custom home building business is to establish and adhere to systems for all aspects of the business. Within sales and marketing, you can establish systems for lead generation and tracking to determine if you are getting the best return for your marketing dollars. Look at the last time you lost a job and become a problem preventor. Identify why the client didn’t sign with you and make the necessary changes to prevent this from happening again.
Within estimating you can develop procedures and checklists to make sure that you are including all items in your estimate. Look at the last time you left something out of your estimate and develop a system to make sure that you do not make the same mistake again.
Production management is another area where systems can be implemented. Procedures and checklists can be established for everything from verifying the receipt of material to making sure your subcontractors complete all activities. Issue purchase orders and work orders that are coded with the appropriate job cost category to minimize posting errors.
Develop written procedures for processing invoices that include matching the invoice to the purchase order or work order and receiving ticket. Provide your trades and suppliers with written procedures as to how and when you process their invoices and implement systems that adhere to these procedures.
