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| Southeast
Construction Magazine: September 2005 Issue |
High
Performance is the Path for Successful Contractors
By Ted Garrison |
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The
reason that high performance is so important is very
simple: High performing contractors make higher profits!
This claim is supported by a Harvard Business School-funded
research project (Corporate Culture and Performance
by Kotter and Heskett) that discovered that businesses
that focus on meeting the needs of customers, employees
and owners while developing leadership through the company,
outperform the competition in four critical areas:
- Revenues increase 4 times faster.
- Job creation is 7 times faster.
- Owner equity grows 12 times faster.
- Profit performance is 750 times higher.
The
question is what is high performance© Most contractors
claim they provide high performance; however, general
clients have a different opinion. Unfortunately for
the contractor the only opinion that matters is the
client's.
The
problem starts with quality, which I declare consists
of three essential elements. The first is the bricks
and mortar and most contractors do a reasonable job
in that area.
Service
and relationships are the other two elements that make
up quality. In these two areas there is a substantial
difference between contractors. However, the contractors
that master these two areas differentiate their companies
from their competitors and experience extraordinary
benefits.
I have heard statements that illustrate the importance
of service and relationship. One common statement is,
"They are the best contractor in town, yet if they
improved their close-out procedures and communication
they could substantially improve their performance."
The highest-performing contractors listen to their clients.
A key
to this concept is better understanding the concept
of client. I prefer the definition of a client as "someone
under the protection of." How long would you keep
your attorney or financial planner if you didn't think
they were protecting you© Then how long should
a construction client keep a contractor if he's not
protecting him.© Yet, how many construction clients
think their contractor is out to protect them.©
Instead
of protecting the client, contractors often find themselves
in conflict with them. This serves no one. And yes,
I understand that many clients create many of the conflicts.
However, instead of protecting the client from himself
the contractor retaliates in an effort to level the
playing field.
The
confrontational approach has a fundamental flaw. There
is no such thing as a successful win-lose situation.
The reason is the loser will sabotage the process until
it finally ends up in a lose-lose situation. Therefore,
the only sustainable relationship is a win-win-win environment
that includes, customers, employees and construction
company owners.
Cooperation
is the spirit of the "Best Value Procurement Approach."
This approach works because it delivers the greatest
value to the client, doesn't exploit the workers, and
rewards the contractor for high performance. I realize
that some customers will insist on hammering on price
with the aim of getting something for nothing.
The
alternative is for contractors to seek out clients who
understand value. Contractors that do that are rewarded
with higher profits and growth and have happier clients.
Dr. Kashiwagi, in his book Best Value
Procurement states, "Quality contractors earn more
profit because they are more efficient, are not price
based, perform work properly the first time, and are
requested by [clients] who want work done right."
I don't
want to mislead you; this approach isn't easy. It takes
hard work, but it is certainly better than the alternative
of competing on price.
The
choice is yours, but when you find clients that realize
that you're entitled to make a fair profit for the value
delivered and you treat them the way they want to be
treated, your business will soar to new levels.
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