Ideal Homes
Handbook for Winning

Founded in 1989, Ideal Homes of Norman, Okla., achieved a 30% growth rate for each of its first five years in business, and has since become the largest home building company in Oklahoma. Ideal received the 2005 NHQ Silver Award. Vernon McKown is co-owner and president of sales for Ideal Homes.

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Recruitment and Training

Part of how we get good people is our process in hiring. There's a book called "Topgrading: [How Leading Companies Win by Hiring, Coaching and Keeping the Best People"] by [Bradford D.] Smart. It details the entire hiring process that we use. This includes a 30-minute telephone interview, and about seven hours worth of interview questions that we run all of our candidates through. Whether you're being hired as a receptionist or V.P. of operations, you're going to go through our job screening process.

Once we get you in our organization, one of the biggest areas we feel is key to success in having great people is job-specific training - helping people understand what success looks like in their role - and an orientation to what our company is about. We start off with a three-day orientation just to indoctrinate them into our culture, our core values and our beliefs system, and what it means to be a part of the Ideal Homes team. Then we tear off into track-specific training. For example, sales requires another three weeks of classroom intensive training, eight hours a day, on what it's like to be a sales person at Ideal Homes. What are our expectations? What do we want you to say to our customers and how do we want you to interact [with them]?

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Employee Evaluations

Another key to having exceptional people is being able to give them feedback. When you hire really talented, great people, they still have to have direction. You bring them in and give them great training. You put them out there. They've got to have some form of measured feedback to know how they're doing as the year goes along. At 90 days, we bring our folks in and we give them some feedback and say, "Based on where you're at in the organization, when you first started with us to where you are, you're on track."

Something that we got from the NHQ process is really focusing on aligning our entire organization around our company core values. I can tell you when we started our company 14 years ago, we didn't have, well, we didn't know we had "core values." We had a set of core values. We just never defined them. We were creating a culture, but we didn't know it. Now that we've gone in and defined it, we really spend a lot of time [on it]. At every staff meeting, we take time out and talk about our core values and how they work with our company and how they line up with our customers.

We also try and evaluate what our employees think we're doing as a company, right and wrong. So we ask that question, "What would you like to see our company stop doing, start, or continue doing?" You'd be amazed. We hire people from all different types of industries, and when they come to us they bring with them a wealth of knowledge. We just hired a lady from Cingular Wireless. She came out of their operations department. When she came in, she had a whole series of ideas on work flows and processes, so by asking her what would she [like to] see us start doing, she had a lot of really great insights. So if you open your minds and your opportunity to listen to people, you can learn a lot from your staff.

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Compensation

I think this is really key and, as builders, we have to be sensitive to this because we're out there in the arena every day trying to control cost. We spend a big percentage of the day negotiating and chiseling with contractors and suppliers and vendors for the best possible value. Well, the place to not do that is on payroll. When we hired a CFO, we wanted to have one of the best-paid, best CFOs in the market. We really look at benchmarking across the line in our company. We want to have the best sales people, best marketing people. We pay our receptionist over $30,000 per year, plus profit sharing, because when people call in and interact with Ideal Homes, we want them to have a memorable experience from the person that answers our phone. So we try to pay top of the market for every position.

"If you're just going to put profit sharing out there, and not go over with people how your financial statements work and how profit sharing flows through your company, you're just giving money away. Maybe that's all right in your organization, but we want every dollar that we give our people to mean something." - Vernon McKown

For several positions, we add on an Incentive Bonus Program. If you want to get results in your company, you've got to incentivize your staff. Our sales people's salary is base. I know a lot of you guys out there - and we used to be one, too - where it was all commission. But we give our employees a base salary so they can have something to count on.

Our builders, on the other hand, get 2/3 of their salary as base and then the other 1/3 is bonus, and their salary breaks out on a per-unit basis. Their bonus is based on being on budget, on time, and on quality. We have a series of measurable, skillable work and checklists that we can [use to] quantify every one of those, so when the builders are moving through the process with their house, they know exactly where they're at with each home and how their bonus is going to roll through.

We started out profit sharing about five years ago. There's another really good book called "The Great Game of Business," by Jack Stack. It talks about making your employees owners in the process. Every employee, after being with the company for six months, is eligible to participate in our profit sharing. Our profit sharing formula is real simple. We take our company's net profit, and we give a percentage of net that we make and take that out of our total net profit. So if profit sharing is 10% net, and we made $1 million for the quarter, 10% of $1 million is $100,000. We put that amount in employee profit sharing. It if was 9%, then it would be 9% of that number that we'd set aside. We then divide that amount evenly among our employees.

You need to review all your financials every month with all your employees. If you're just going to put profit sharing out there and not go over with people how your financial statements work and how profit sharing flows through your company, you're just giving money away. Maybe that's all right in your organization, but we want every dollar that we give our people to mean something.

So, every month at the staff meeting, we spend about 15 minutes and we run through the numbers. We start off with top lines. How many customers came through open house? How many sales did we get that translates to this many dollars in revenue closing? It goes a long way, and we break that down for them as to how much goes into the employee's profit sharing.

We don't give out profit sharing if our company if we're not making at least a 5% net profit. We got that from looking at national averages and seeing that the average builder in America makes 3-5%. We don't want to be average. So we figured if we only make 5%, we're not giving profit sharing. But anything over 5% our employees could participate. So if it's 5.5, then we take 5.5% of our net and give it back to them. And you've got to distribute it quarterly so that people can be experiencing it on an ongoing basis. If you wait until the end of the year for one big fat profit sharing check, it's too hard for people to stay connected and tied to it.

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Community Reinvestment

We set aside 5% of our company's net profits to give back to the community. Whether it's Habitat for Humanity, United Way, the Chamber of Commerce - we give back. That has been a core value of our company from the beginning. It has caught on like wildfire. Last year - I don't remember exact totals - but it was north of $0.25 million that our company gave, and then our employees went out and raised approximately $0.25 million on their own. So when we do walkathons for our Juvenile Diabetes Foundation, or we went out and raised money for Habitat for Humanity, our people give out of their own pockets and they go out and raise money out in the community.

It's engrained in our whole culture now to be good stewards and give back. It's amazing - the sense of accomplishment and pride that our people take. We do community service projects as a team every month and it has gone a long ways towards building unity, company pride and camaraderie. It's one of the favorite things of the people that work for us at Ideal Homes.

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Visit the Ideal Homes Web site at www.ideal-homes.com