‘Leading From the Front’ a Secret of Success
Industry experts who have received the National Housing Quality Award from the NAHB Research Center, the highest recognition for quality achievement in home building, shared the secrets to their success at an educational seminar at last month’s International Builders’ Show in Las Vegas.
K. Hovnanian, Northern California, received an honorable mention in the 2008 National Housing Quality Awards for customer satisfaction, and division president Larry Young attributes the honor to “leading from the front.”
“Tell your managers to lead from the front. Be a zealot. Julius Caesar was never defeated on the battlefield because he led from the front. We spend time out in the field, show up for walk-throughs and have face-to-face interactions with our customers,” said Young.
Digging down further, Young said another critical ingredient for success is an emphasis on employee training and job satisfaction.
“Associate satisfaction equals customer satisfaction,” he said. “If they are not satisfied with the company, the customer will not be either.”
The philosophy at K. Hovnanian is to ensure that employee training is consistent and ongoing and covers a wide gamut. For example, employees who frequently interact with consumers — such as warranty, construction and sales people — are taught what to say to customers as well as what not to say. An online program is focused on the technical aspects of building on-site, and supervisors shadow train by observing their associates on the job to make sure they are performing their work efficiently and interacting with their customers in the proper manner.
Becoming More Efficient in Lean Times
Like other home building firms, K. Hovnanian has been affected by layoffs and has had to learn how to be more efficient and responsive in lean times.
Young said the firm has instituted an aggressive cross-training program where coworkers from different departments — such as construction and warranty — learn how to do each other’s jobs.
“This breaks down the walls between departments in the company,” he said. “As times get tough and we need to reduce staff, this has helped people perform multiple functions and make the transition to a smaller staff easier.”
To make employees feel responsible for customer satisfaction, K. Hovnanian created customer satisfaction goals for its warranty, construction and sales teams that link satisfaction to compensation. Employees who achieve their goals can be awarded a bonus upwards of 20% of their salary.
“The more employees are engaged in the process, the closer we are to achieving our goals,” said Young.
Another NHQ winner, the K. Hovnanian Virginia Division, received a silver award in 2009 for trade partnering.
Establishing Trade Partner Councils
Chip Merlin, vice president of operations for the Landover Group, K. Hovnanian Homes in the MidAtlantic and Carolinas, said that establishing a trade partner council with your trades is beneficial to both parties because it increases collaboration, facilitates communication and leverages talent.
Partnering requires a team approach and developing trust between the builder and trade partner, he said.
“You should run your trade partner council like a business,” said Merlin. “Develop a charter that outlines the council’s goals and defines the roles and responsibilities of the participants.”
The advantage for his trade partners is that it gets them closer to the firm and gives them a leg up on the competition. K. Hovnanian benefits by knowing that it will have quality contractors working on its homes.
“We want the best trade partners and crews,” said Merlin. “We deliver the most satisfaction to them in terms of overall value. We are their builder of choice. And our customers know that we are building high performing homes with high performing people.”
Working Better Together
Fireside Hearth and Homes, Manassas, Va., received a silver NHQ award in 2008 for the same category. Dave Scott, vice president of sales, said that trade partners are taking ownership of their product.
“They are an untapped resource,” he said. “Before, I was never able to talk to contractors and laborers to see how we can work better together. All of us are smarter than any one of us. It’s an opportunity to get my eyes and ears into another part of the business.”
Scott said his business is 20% the size of what it was in 2006 and that his staff has been reduced by two-thirds, but his firm still sees opportunities through trade partner involvement.
“It’s all about inclusion and collaboration,” said Scott. “Trade partners seek to reduce the cost of doing business with each other. The results of collaboration are increased quality, higher customer satisfaction, committed trade partners and increased profitability.”
Effective Leadership Needed
T.W. Lewis Co., based in Tempe, Ariz., received an NHQ 2009 Gold Award for leadership. The firm builds 2,800- to 5,000-square-foot homes priced from $500,000 to more than $1 million.
Kevin Egan, president and chief operations officer of the firm, said that leadership is the ability to inspire people to turn a vision into reality.
He cited several elements of effective leadership. The first is to establish clear expectations for employees.
T.W. Lewis requires new associates to perform a 30-day orientation check list. “They must take the responsibility for learning about their job skills and responsibilities,” said Egan. “If they are not taking the initiative to educate themselves after 30 days, they won’t stick with us for the long term.”
Effective training is absolutely essential to produce a winning product, said Egan. This includes: leadership and service training to improve coaching and interpersonal skills; skill training that focuses on policies and procedures and service processes; and a management development program targeted to top performing associates. The two-year program includes strategic business planning, operation management and financial reporting.
To promote feedback on strengths and weaknesses, T.W. Egan encourages creating avenues for associate participation, such as an Intranet suggestion box for all its associates. During bi-annual performance reviews, employees also have the opportunity to offer suggestions to their managers to make them more efficient and successful.
The company also publishes a monthly newsletter that recognizes top employees in their respective areas.
With upper management leading by example, Egan said that the goal is to create an environment that allows people to succeed.
“You demonstrate the culture you expect and live the values you have defined,” he said.