Analysis



I travel this country meeting with builders virtually every week and between my monthly Professional Builder article, my weekly blog on HouzingZone.com and our Lean Building Group on Linkedin.com, I hear from many more. As housing is picking up in most parts of the nation, I am beginning to hear a lot about labor shortages. Just last week I received a note from a builder lamenting how in central Florida there is a bidding war for framers and drywall contractors. I have also heard it coming out of Texas.

Todd Hallett and I are running a LeanPlan Workout session this week in Tennessee with one of my favorite builders. In the years I have known them they have grown from #11 in their market to #2 last year and this year there’s a good chance they will be #1. They are beating all the nationals. These guys truly “get it” and accomplished all this during the worst housing recession in history. As good as they are, they wanted to take it deeper, so this they engaged a total of 24 of their suppliers & trades to generate more than 300 ideas to improve plans, using our highly-structured process.

Readers may recall a study I did a few years ago attempting to identify the most reliable predictor of future new home sales activity.  The closest predictor turned out to be the Michigan Consumer Sentiment Study (MCSS).  The trick was that you had to adjust the MCSS data six months FORWARD to match new home sales.  In other words, six months after MCSS started to improve, new home buyers feel confident enough to buy a new home.

The 5th article in my series on Quality Management was just published by Professional Builder Magazine and appears concurrently on www.HousingZone.com. It is titled “10 Steps to Mastering Field Quality” and at the end of the piece I offered a PDF with all 5 of the articles in a single document. I have since been deluged with more than 30 requests sitting in my mailbox just this morning. In my 15 years writing monthly for the building industry, this is the most requested article or series I have ever done with more than 100 requests to date.

Some customers can be “impossible to please” (IP), but keep in mind, when open to the public, a home building company is exposed to all personalities within the public.  After all, that idiot that cut you off on the highway this morning lives somewhere!  This means, on rare occasions you will sell a home to one of these IP customers.  A home builder that builds 20 homes per year statistically should experience an IP once every 2-3 years.  A home builder building 300 homes per year will likely see 8-10 IP customers per year.  The question is: What should be the strat

Many experts have said that it is unreasonable for a company’s leadership to expect their employees to take better care of their customers, than the company does for the employees.  There is a lot of truth in this reasoning, but in addition to customer satisfaction implications there are business operations to consider too.

When the industry tanked, most home building companies felt that if an employee still had a job, they darn well should be satisfied!  The drastic market decline forced builders to 1) reduce staff, 2) eliminate bonuses, 3) trim benefits and even 4) reduce

We can all relate to great leaders, but we may fail to note what makes them so.  Harry Truman is quoted as saying, “Not all readers are leaders, but all leaders are readers.”  Such is the case with last year’s Professional Builder Magazine’s Builder of the Year, DSLD Homes and their leader Saun Sullivan who is a prolific reader.  His reading titles could be classified as the home building industry’s must read list, and he shares these gems with many (thanks Saun!).

I have spoken at PCBC, the big West Coast building conference most of the past 15 years and I always enjoy it. The event has been very well-run, quality of programming is excellent, the staff is great and you can do a lot worse than hang out in downtown San Francisco for a few days. I have been there so many times that I know all of the streets and how to get around, walking or driving. I even have my favorite hotel and off-the-beaten-path restaurants. Yet as PCBC begins later this month, I will be on the other side of the country.

This week's installment of Charlie Scott on Customer Satisfaction in Home Building questions how new houses are delivered to customers.  Admittedly this entry is a bit cryptic, and you will have to study it, but hopefully this cryptic analogy will bring some clarity to your home building company's delivery process.  Clearly, there is no one "right" way to deliver homes to customers, but it is critical that a home building company deliver on all promises and meet (or exceed) the customers' expectations.  Bon appetit! 

My son Tyler (second of 4 children), age 29, is taking a new position with a homebuilder after having two good building industry jobs in the past, both of which vanished in the housing recession. Despite the previous disappointments, he sees this as a great opportunity with a real chance to grow with a good company. It got me thinking about all the work I have done in my career, where I did well, where I screwed up, who I have hired, who I have fired, and all the people I have watched soar and those I have seen flame out.

Years ago, well after the huge productivity gains of the industrial revolution, employers still sought productivity improvement.  In an effort to find these productivity gains, many studies were conducted to find causes and effects of higher productivity.

The most popular study was done at Hawthorne Works between 1924-32, where researchers tinkered with many variables, then measured worker output to see if their tinkering had the desired effect.  The most famous experiment involved slowly increasing the lighting – which resulted in higher output, however, this higher output

Every builder wants to have outstanding customer satisfaction, right?  Our research shows that to accomplish the highest customer satisfaction builders must think outside the box, and I don’t mean the proverbial “creative box,” I mean literally outside the house box!


In our role as the “Voice of the Customer” partner for many of the nation’s leading home builders, we read and analyze thousands of customer surveys.  This extensive multi-market, multi-builder research allows us to  pattern and identify the industry's most frequent customer

During an orientation recently with a room full of suppliers and trades for one of our “LeanPlan Workout” implementations, I was interrupted by a woman who clearly did not appreciate my message. Despite my saying it 6 different ways and illustrating with numerous pictures, she was not buying my story that Lean is not about “dumbing down” the houses.

They say a writer never “makes it” until he gets hate mail. In at least four blog posts this year, I have expressed my frustrations with architects and engineers in this country and those posts have invited a few terse replies, one of which appears below. My rant is that either through lack of care, concern, understanding or education, these professionals rarely recognize the critical link between their work and a builder’s ability to produce a high quality house at any price point in the most efficient, cost-effective, value-producing manner. And that costs us all.

Home building is an extremely complicated business and as such requires very intelligent people and systems.  Think about it for a second.  To build a home, over 400,000 pieces/parts and 2,000 people must be precisely coordinated to bring these pieces, parts, and labor all together at the right time in the right sequence – and often at a remote address that may not have even existed 2 months earlier, WOW!  It takes very dedicated, intelligent people and solid, well planned, processes to pull that off!

While the home building industry is blessed with people of abov

Today, a sharp young guy named Ryan wrote to me after seeing a Keynote Presentation I did at the recent BuilderExchange meeting in Las Vegas. Two-hundred fifty people attended from 60 suppliers and a like number of builders.

A builder would never build, merchandise, and maintain a model without staffing it, would they?  Of course not - this would be abuse of an asset!  The return on this asset (ROA) would be zero, zilch, nada.  No competent manager would ever allow an asset to exist without some expected return on that asset, right?


Most builders expect their model, community, and marketing to return at least one sale per month and cover the bulk of the costs.  Two sales per month break even, and three sales per month make it a profitable community.  The numbers may va

Last fall the president of one of America’s “Top 10” builders who I have known for years corralled me at a conference. Because I travel this industry about as much as anyone, he likes to pump me for intelligence – as I do him. He wondered, what did I see out there? Who was making it? Who wasn’t? Which cities were ready to emerge and which were not?  I gave him my take on things and then he asked a series of bombshell questions, “Who really impresses you? Who truly has the best practices?

The NAHB in conjunction with Professional Builder Magazine launched the National Housing Quality Award (NHQA) in 1993 to encourage and recognize best practices and best builders in the continual improvement of product and process. Modeled after the Malcolm Baldrige National Quality Award, over time the NHQA has become the gold standard of awards in homebuilding.

Let me be straight - I am anti-Net Promoting Index (NPI) in the home building industry and this is why...


When I was a manager/leader/owner of a homebuilding company there was a recurring problem that I often saw (and personally committed).  Too often, we would manage our company by average numbers.  For example, let's say our Willingness to Refer (WTR) declined 5 points from 95% to 90%.  We would become upset and meet with the Sales Team and Builders to tell them "we are better than this!"  We were managing the company and staff by the average number. 

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