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Aligned for Takeoff
NHQ Gold Award winner Don Simon Homes improves and transforms to display a total quality package
Patrick L. O’Toole, Senior Editor
November 19, 2004
HousingZone
If the name Don Simon Homes rings a bell, it stands to reason. Last year at this time, the company was profiled in these pages as a winner of the National Housing Quality Silver Award. Its was the story of a company with nearly all the quality pieces in place, well on its way toward the elusive goal of total quality management.
It would have been hard for even Don Simon Homes executives to anticipate the rapid progress and transformation the firm would soon undergo. But they must have had an inkling. After all, they applied for a second NHQ Award. And now — only 12 months later — the company, its processes and personnel are nothing short of NHQ Gold.
The thumbnail history of the largest home builder in Wisconsin goes back more than 45 years to its founding in Sun Prairie, just outside Madison. Founder and chairman Don Simon, who passed away last month, did everything from bookkeeping to nailing roof shingles. Later, as the company grew, he gradually brought in his two sons — David as president and CEO, Jeff as vice president of operations — as well as daughter Karen Simon-Dreyer, as corporate secretary.
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| In 1994, Don Simon Homes deliberately slowed its volume to retool its operations. Since then, homes sold and gross sales have followed a steady growth track. |
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| Don Simon Homes measures customer satisfaction twice: 30 days and 11 months after closing. Nearly all of its customers say they would recommend Don Simon Homes to others. |
“We decided that we wanted to start having fun. We wanted to make money. And we wanted a good name. That is when we started to turn things around.” From 1994 to 2000, Don Simon Homes was in the early and middle stages of its re-engineering journey. To lay the foundation for future quality initiatives, the company deliberately slowed its output and set about documenting all of its processes. In a scaled-back mode and with newly written action plans for scores of home building tasks, the company had the basis from which to redefine itself. It did so by adopting a mission statement, a vision and a list of supporting values that set it on a course for leadership in its marketplace. After that, says David Simon, it began to search out and gradually implement ways to overcome common sources of frustration for buyers of new homes. David Simon calls them “war stories” that people attach to the industry as a whole.
To attract home buyers who stay away from purchasing a new home because of talk about delivery delays, Don Simon Homes implemented a way to guarantee delivery dates in a nine-week, frame-to-close cycle. For home shoppers who worry about the hassle of completing unfinished items after closing, the builder devised a program of 76 positive, pre-planned customer “touches” to manage expectations throughout the process and let customers know that Don Simon Homes would not disappear after closing. And to allay the widely held fear that new homes generally go over budget at the buyer’s expense, Don Simon Homes built a customer-expectation process that begins in the design center, where a full set of detailed drawings of each new home is signed by the customer at contract origination. Subsequent change orders are similarly documented.
“It was recognition on our part,” says David Simon, “that our biggest competition was the used home market. We wanted to take the hassle out of building a home.”
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Other achievements in place when the judges visited the first time included zero missed closing dates in three years; customer satisfaction surveys that revealed a 97% “would recommend” rate; and a string of 29 months of staying within 1% of budgeted home building costs. These were all remarkable achievements, says Ed Caldeira, director of the NHQ Award program with the NAHB Research Center, but it was still essentially a management-driven initiative. In the judges’ view, the mission, vision and values had not reached the staff level. Nor had they reached the company’s 64 trade contractors with enough depth to achieve “alignment” from the top of the organization to the bottom.
So how is it that in less than one year, Don Simon Homes went from being a company “on track” for quality with a Silver Award to one that exemplifies the highest level of quality achievement? Luck had little to do with it, says Caldeira. He calls the improvement and transformation to the Gold level “amazing,” representing the kind of change possible only in companies with quality systems in place.
“Most companies in any industry will never achieve this level of alignment toward a common purpose,” Caldeira says. “The fact that they have been able to accomplish this in about a year is amazing because of the way they did it. It did not happen by chance. It was a process they followed.”
The Transformation
Through the fall and winter last year, Don Simon Homes changed little of the operations it already had in place. But it soon began layering on an impressive list of initiatives that added to the company’s operating strength. And whereas most of the company’s previous quality initiatives had been the focus of top managers, the overriding objective of the new processes was increasing the lines of communication and involvement to and from staffers and trade contractor partners.
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| Dave Jones of Dave Jones Plumbing & Heating discusses an Opportunity for Improvement (OFI) with construction manager Chuck Jones. |
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Next came the first in an ongoing series of detailed regular surveys of staffers and trade contractors. Launched with the help of an outside consulting firm, the survey initiative has helped the company achieve two major goals. First, leadership has been given solid feedback on its performance in the eyes of team members. Second, trade contractors have been sounded out for ways Don Simon Homes could improve their businesses. Even more impressive was the speedy follow-up on the survey results.
“The trade contractors basically said: We want better scheduling. And we want better communication with our change orders and purchase orders. We are not getting them soon enough. We also want more timely changes to our building plans and our details,” Jeff Simon says. “It was those areas that we focused on.”
On March 8, a month after the survey was conducted, Jeff Simon and production manager Gary Zajicek presented the survey results to all 64 trade contractors and offered a plan for even-flow scheduling beginning April 1 — one start per business day, one close per business day. Meanwhile, 40 or so other homes would be built on a second production stream with separate crews.
Caldeira spoke with many of the trade contractors about the survey-solution process and described their response as “thrilled.”
“Everyone thought even-flow was a good idea,” he says. “But they also had a sense that even the right thing could not get done in our industry. And that is where the Simon people provided the leadership to make it happen. They brought the contractors together to operate as a single production unit.”
Jeff Simon and Zajicek say the even-flow process requires constant attention and more process innovation. The centerpiece of weekly 30-minute meetings with the trade crews is a stack of site-readiness surveys from the preceding week that essentially require each crew to grade the previous trade on the job it is doing. The system works because the trades see that the Simon construction managers provide thorough follow-up. The CMs also provide constant follow-up on a second checklist for “hot spots” that has become a new NHQ best practice. Reams of punchlist data from months of closings were boiled down to a list of frequently overlooked items for each trade. As an item gets knocked off, it graduates to a required task, and a new hot-spot item replaces it. It is an example of a continuous-improvement process that helped the company “close the loop” with customers and NHQ judges who came through on a second site visit in August.
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| Rock-steady cycle times have been the backbone of the company’s written guarantee to deliver completed homes on a date certain. Meanwhile, the time required to complete service orders has declined dramatically. |
“I think it really came back to also the right thing to do,” he says. “If you go back to our vision, one of our statements is giving back to the community. We are doing that by making it really easy for our customers to build a green-built house and save energy.”
Internally, a team from the University of Wisconsin’s Center for Productivity and Quality is helping the company better map its processes as part of a strategic improvement process. In the area of team development, the company recently introduced a tuition reimbursement program, the ability to participate in a management certificate series run through the university, and a number of communication-improvement opportunities offered by Dale Carnegie and other groups. Communication has also been enhanced through a beefed-up intranet. All team members can check out how well the team’s GainShare data are being met through a “Digital Dashboard” filled with the latest company sales and performance data. Also impressive has been the introduction of an online “Plan Rack” where the latest OFI improvements to home plans can be viewed.
But most impressive to the returning NHQ judges was the less tangible initiative through various means of bringing home the vision, values and partnering principles to every member of the team.
The structure of twice-monthly meetings with the entire team is dictated by these principles. And, David Simon says, a verbal review of these statements when each team meeting begins is also having an impact. So, too, are the tri-fold, laminated, wallet-size cards that serve as reminders.
Proof of teamwide alignment with these principles came during one-on-one conversations with team members. Asked for an example of “commitment to our home buyers’ satisfaction,” accounts payable coordinator Dave Schulz mentioned the care his group takes in assembling a change order settlement document that each buyer receives at closing. “We are committed to getting that to them in an understandable format,” Schulz says, “so they can feel confident that everything is correct.”
© 2008, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.