Four years ago, Bill Frazier, president of Austin Gutterman, in Austin, Texas, sat down to evaluate his gutter and gutter-replacement business. Sales were stuck at $2 million and profits were far from spectacular. He was working “way too many hours” and his style of managing was strictly Lone Ranger. “I thought I could do it all myself,” he says. “I was wrong.”
Today the Texas contractor is home for dinner every night; Austin Gutterman's sales are twice what they were; and net sales per employee, gross profit per employee, and overall net profit are way, way up. Best of all, the company runs far more smoothly.
Frazier is not the first to have concluded that there must be a better way to manage a business or that replacement business owners have other functions besides refereeing squabbles between departments and taking calls from furious clients.
Shawn Feurer, of Norton's Quality Exteriors, in Midvale, Utah, had also arrived at that understanding. “There was a lot of firefighting going on,” recalls Feurer, about the company he co-owns with his father, Ralph. “We had problems between administration, sales, and production. I don't know how many times I'd field calls from customers who wanted to talk only to the owner because they were so frustrated and upset.”
Not any more. In the last three years, referral and previous customer business at the Utah roofing, siding, and window company has risen from 40% to nearly 60%. Profits are up. Best of all, Feurer says, “I don't get those angry phone calls.”
MANAGING UPSIDE DOWN Feurer and Frazier changed things by standing management on its head. They put systems in place that transferred responsibility for work standards, productivity, customer relations, and other benchmarks to employees. They stopped sweating every call and complaint. In doing so, they put the energy, experience, and skills of employees to better use.
So-called Total Quality Management (TQM) programs aren't common in construction, and are rarer still in replacement contracting. Yet, effectively implemented, such programs are far-reaching and likely to affect everything from profitability to morale. They don't have to be elaborate. It's best to start simple and enhance with time. You could launch one now, with just a few essential elements: top-management commitment, accurate job costing, a performance-based incentive program, and regular periodic job review meetings.
Start with management commitment. An effective program must be initiated from the top, and that means change. “Nobody wants to do it,” says Jeffrey Fick, vice president of sales for The Fick Bros. Roofing & Exterior Remodeling Co., Baltimore, Md. “Unless the owner puts his foot down and says, ‘This is going to happen,' it won't.”
Be prepared to grit your teeth and go to work. Tom Capizzi, owner of Capizzi Home Improvement, Cotuit, Mass., instituted a TQM program several years ago. In his experience, contractors fail when they don't persevere through the inevitable start-up problems. “The program starts to fall apart and they quit because it's so difficult to implement. You've got to have staying power,” he says.
Of course, all the commitment in the world won't help if you can't measure success. Generally, you want to document every job your company does as completely as possible. Accurate job costing is crucial to getting a program up and running. “The money systems must be in place first and in a format that's used in the industry because that's what drives so many decisions,” says Victoria Downing, president of Remodelers Advantage, remodeling industry consultants in Laurel, Md. “Without that significant decision-making tool, you really are lost,” she adds. “You have to know what you're measuring against,” Feurer says, “so when you meet with your people, you can say: ‘This is where we are and this is where we want to go.'”