Labour is biggest maker or breaker in project profitability in the construction industry. A 5% swing either way can cause a 50% swing in net profit. This is particularly true for renovation projects, where the labour component typically represents a higher proportion of the total cost, compared to new builds. The work is also more challenging in a reno situation too and so a higher skill level (therefore higher cost) is typically required.
So managing your team is critical to achieve a successful project. Some people are natural leaders and are able to build a loyal, effective and efficient team that require little direction. The rest of us can struggle with this and end up with an okay team, but often held back by a difficult member who poisons the worksite with their attitude. Dealing with this difficult personality type is not easy and some owners would rather juggle chainsaws than proactively deal with the problem.
So how do you build a great team that will self manage and smash out the work to a high standard?
Like a lot of problems in business, go to the beginning of the process and try to avoid the problem occurring in the first place. That means hiring better. I know labour is tight, but having a process to vet candidates better, ask the right questions, check verbal references and testing claimed skills actually exist will go a long way to helping in the long run. Even use a specialist employment agency if the position is an important one. I know this costs, but spread out over a few years, it is cheap insurance.
Can’t find the right skills? Consider sub-contracting parts of your work to other companies that DO have the specialist skills. This will allow you to get on to other tasks in the project. Again, it may cost a bit more up front, but often a specialist will get the work done quicker and better than you can as a generalist.
A key element in building a team is YOU, the owner. Part of your role is that of leader, not manager, but leader. There is a big difference. A leader draws people along with them through setting a good example, inspiring by sharing a vision, having solid core values and giving responsibilities to others. A manager just pushes. It is up to you to set the CULTURE in your company and make sure that it is a living and breathing thing in your business every day.
Part of that vision sharing process is to have a bit more systematic communication with the team. I am not one to have a meeting for the meetings sake, but a well structured meeting can be a powerful tool for making sure everyone is on the same page and is being as efficient as possible. It is also a chance to touch on the culture of the business and remind everyone what the name of the game is.
Incentivising staff to perform above and beyond is an idea that is debated by many. Some say it works well. Some research shows that it actually is counter to increased efficiency. I believe some form of incentive-based pay is useful to reinforce the mental link between, more production = more pay. The trick is to incorporate it into an overall strategy of managing your labour and not making it the biggest component. Too much focus on hitting production goals can blinker a person and stifle creative problem solving skills.
Last but not least, weed out bad apples. Don’t allow someone to poison your company and the positive culture you are trying to create. It may cause you some short term pain, but you are better off in the long term, financially and emotionally, by getting rid of a negative, poor performing team member. There are processes to follow and I can help guide you if you need.
Andy Burrows – www.tradescoach.co.nz email: andy@tradescoach.co.nz