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The Pain and Magic of Metrics




By Noelle Tarabulski, CEO, Builder Consulting Group

 

By my count, there are over 150 ways to improve a home builder’s profit. This is just one.

 


 

 Summary: As a builder I want to understand how I can measure events and actions that matter, so that my team focuses on the right tasks and can be rewarded for accomplishing tasks in an accurate and timely way. I want to avoid setting high expectations with my team that I cannot fulfill.

Rewarding effort to do something is never effective if you actually have to have results to be successful. A for effort, F for results does not cut it in our business. A for effort, A for results is way of life in the building industry, Sammy was learning it the hard way.

Many times clients have tried numerous times to help motivate their teams by giving them performance bonuses, yet the results were not good because they could not document results and pay them in a timely manner. Thus the concept of performance bonuses turned into a disaster and they just gave everyone a raise and stopped the measurement of results. This can be a complete bummer for all involved. 

Sammy was one of my clients that was exhausted from the fact that his team never seemed to move as fast and urgently as he did. He was always pulling the team. He was stymied on how to get the team MOVING!!

“Sammy what metrics did you use?” Sammy looked at me, and said “ Well,  we were all about delivering on time, good quality, and happy customers, but we realized we had very broad concepts and no real measurement tools in place, additionally we were really slow about figuring out what we owed them.”
“So people were bummed and did not believe in what you were doing?”

“Yes, it became a real cluster as they say.” He lamented.

“Ok, first, I can tell from my site assessment that your reporting is weak, not orderly, not timely and not always accurate. So right away we must get in place disciplined reporting and data that works. All the rewards have to be put on hold until we can report cycle –time, variance purchase order results, quality control measurements, and we need a good 3rd party survey in place. “

“Noelle, seriously, that is lot of things we are missing, I sure missed the boat on what it takes to reward results with metrics. I really did not understand the science of this. If we get all this in place, then life should be better in many ways for all of us !”  The light went on for Sammy. “Yes indeed this company will perform better, your team will be focused, and you get to take a nice vacation in the next year!!!”

Sammy outlined his thoughts, “ Ok, we need to make our reporting easy, accurate and timely so that when we say we will build a townhouse project in 9 months, or 210 calendar days, we know the start, we  track it and we know what delivery means to me and to the super ?” “Exactly, this cannot be a kinda maybe thing.

“Results are real and measureable.  Many times the actual tools and techniques are wrong or nonexistent. The nice thing… once you get this in place. It is in place as long as you manage it in a disciplined way. “

It took some time, but eventually, we developed great reporting, relevant metrics and we were able to reward the team in an objective and transparent way. We hit the ground running on all projects with expectations of performance to get the financial and customer results we wanted.

Sammy being from the Pacific Northwest knew how to enjoy the great outdoors with a bunch of kids in tow. He loved hiking, camping, burning turns, and  of course sipping a fresh cold beer or two. The good news, he finally had more time,  and a few more coins in his pocket. Oh yeah, his banker lowered his interest rates on his debt, given he was burning through his lot inventory at a much faster clip!!

The moral of this story is – if you cannot measure it, you cannot reward it!! That is my story and I am sticking to it!! NLT
 
 
Home builders and developers are the backbone of this country. They work hard, take risks, and create more wealth for society than any other sector of the economy. If you are a home builder and concerned about your results - you can do better! If you want to find out more, call me at 303.525.4944 or email me at noellet@buildertools.com and LinkedIn is a great place to find out more about my credentials, background, and references.

My first three questions when you call are usually:

1) How many units do you sell per year?

2) What is your average sale price range?

3) What is your projected net income for the current year?

https://www.linkedin.com/in/noelle-tarabulski/

Copyright © 2019 Builder Consulting Group, Inc., All rights reserved.


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