Could some of the most in-demand housing markets be cooling off?
2013 NHQ Awards - Charter Homes' quality journey
Three-time NHQ Award-winner Charter Homes & Neighborhoods shares the lessons from their three-year quality journey.
2013 NHQ Awards - Charter Homes' quality journey
For Rob Bowman and his team at Charter Homes & Neighborhoods, winning the National Housing Quality Award’s highest honor (NHQ Gold) is less about a trophy and a handshake and more about the journey. A journey that started three years ago during one of home building’s darkest hours, with little visibility into the future, and ended with the builder knowing with complete confidence that their journey would have no end.
Charter’s progression through the entire NHQ program — from Bronze to Silver to Gold — is a testament to the builder’s commitment to the NHQ process and their belief that quality management, when well executed, can help a business overcome virtually any obstacle.
“We’re not miracle workers, but we are miracle adapters,” says Bowman, CEO of the company he founded 22 years ago. “We can credit the process of the application and evaluation for helping us build a stronger business in the most volatile housing market to date.”
Charter is the first builder to achieve NHQ Gold since the former Simonini Builders took the top honor in 2009, and they are just the fourth company to win Gold since 2006. Charter joins the ranks of David Weekley Homes, History Maker Homes, Hovnanian Enterprises, Ideal Homes, Pulte Homes, and Shea Homes as a winner of NHQ’s highest distinction since its inception in 1993.
NHQ Gold Award
Charter Homes & Neighborhoods
Markets: Central Pennsylvania (Lancaster, York, and Harrisburg)
2011 revenue: $45.85 million
2011 closings: 211
Charter’s Lessons on the Journey from NHQ Bronze to Gold
Decide on the why — It takes effort to really understand why we do what we do and what truly sets us apart. That shared passion is the foundation of our strategy.
It’s about everyone always improving — The rigor of the NHQ Awards process made us realize that operational excellence requires that everyone on the team have a personal belief that we can always do better.
Work on the business — We now train leaders and teams on a process of how to make improvements, not just identify improvements.
Good enough isn’t — Getting the right work done 100 percent complete takes agreement that anything less is not done.
Feedback is a gift — Getting feedback from others needs to be embraced as what it is: valuable perspective and insight that is most often given without cost.
Figure out the root cause — We often move too quickly to solve a problem or improve a process. We now remind ourselves to ask “why” five times before acting to improve.
Trade partners care — We now engage our trade partners at a level that provides us with feedback on how we can improve our processes and product.
Focus on the process, not the people — When things don’t work, we focus on fixing the process first, not blaming people. With this approach, our odds of long-term improvement increase dramatically.
Resources abound — Share the story that you are interested in improving the business with others and you’ll find people and resources all over to help you along the way.
Beyond survival — In the depths of the Great Recession, we came to understand that our team needed something other than sales goals and survival to focus on. Since we knew we had to work hard anyway, the idea that we could improve our business enough to earn the NHQ Gold Award gave us a reason to never give up, to never be satisfied, and to never blame our non-performance on anything but ourselves.
But more importantly, the company is one of just a handful of builders in the past 19 years to achieve every level of distinction in the NHQ program. This process — during which Charter received three in-depth evaluations (including site visits) from a team of leading quality management experts over the course of three years — was absolutely critical to being able to connect the many dots that go into creating a quality-driven home-building company, says Bowman.
“This process doesn’t ask us to just clean up a few things and get better in a few areas; it forces us to look at our business in a totally different way,” from both the tactical quality processes to long-term strategic planning, says Bowman. “The quality journey demands that we are very clear about where we want to go. It gave us a whole new level of energy and focus that we simple did not have in the first two years.”
The Charter team spent the better part of 2010 and 2011 honing their quality processes and procedures with the goal of creating a culture of continual improvement and operational excellence. These initiatives include everything from instituting a formal trade partner council to establishing better benchmarking approaches and ultimately refining their strategy for the future.
The story of the past 12 months, says Bowman, is of aligning the entire organization, including suppliers and trade contractors, under a common mission, vision, and strategy, and then placing a laser focus on execution. Charter’s retooled mission (which the company calls their “passion”) is “Inspiring character to create special places” — a credo that speaks to the company’s long-standing reputation for building well-designed, well-built homes and neighborhoods.
2013 NHQ Awards Judges
Serge Ogranovitch, consultant (lead judge)
Frank Alexander, consultant
Todd Booze, Ideal Homes
David Caligaris, The Green Company
Kevin Estes, Estes Builders
Tom Gillespie, management consultant
Dan Gorski, consultant
Dan Green, The Green Company
Denis Leonard, Business Excellence Consulting
Larry Owen, ACIG
Chip Pennington, Shea Homes
Duncan Prahl, IBACOS
Bill Saint, Classica Homes
Charlie Scott, Woodland, O’Brien and Scott
Scott Sedam, TrueNorth Development
Jeff Simon, J. Simon Design Build
Gary Zajicek, consultant
The National Housing Quality Awards are sponsored by Professional Builder and the NAHB Research Center. For more information on the NHQ Awards, visit www.HousingZone.com/NHQA.
“The first big takeaway for me is that the power of being aligned strategically gives people the amazing opportunity to do great things,” says Bowman. “The focus on our passion is all about alignment — about getting together to hit the wall in one spot and together being able to do more than anyone can do alone. We could not have reached the point of having everyone aligned without having gone through the first two years of the NHQ process.”
A prime example is trade partner relations, an area where the builder had been perpetually weak in past NHQ evaluations. Using the formal trade partner council, as well as informal, one-on-one meetings, Charter set out to forge stronger ties with their trade contractors and suppliers by listening to their needs and suggestions and treating them as true partners. This integrated team approach has paid off in numerous ways, including the development of an automated scheduling process that provides trades with access to real-time schedules, thus reducing wasted trips to the jobsite.
It also enabled the builder to finally get their arms around the never-ending problem of jobsite cleanliness. “It’s a simple thing to do, but it’s very hard to execute on,” says Bowman. The trick, he adds, is open, honest communication with their trades. “We started bringing in home-buyer surveys and presenting the data to the trades and said, ‘Look how this one issue affects how people perceive our business.’ It was an eye opener for everyone from the trim carpenters to the masons.”
Charter utilizes a report-card system for evaluating the performance of each trade based on metrics such as defects per product, late or missed work, scheduling variances, warranty issues/costs, and homeowner satisfaction. The builder sits down with each trade on an annual basis, as well as when issues arise, to discuss their performance and to set a plan to correct any issues and implement improvements. This approach has allowed the builder to weed out poor performers and more closely align with the firms that do quality work and want to become stronger partners.
By being aligned under a common “passion,” Bowman says the company is able to focus on what’s most important and eliminate wasted effort. For example, if a land deal pencils out but is not conducive to creating “special places,” the builder will walk away — “something we would not have done a few years ago,” says Bowman. “We were chasing opportunity instead of strategy.”
The NHQ judges for the Charter entry, led by consultant Tom Gillespie, commented: “The organization as a whole understands where it is going, what is needed, and the roles they each play in achieving the goals established by the leadership team. All categories scored solidly, reinforcing the opinion of the examiners that the company has graduated to a Gold-level status.”
To be sure, Charter’s quality journey does not end with winning NHQ Gold. Bowman says the company will continue to evolve and work on its weak spots, including homeowner service, time to market for new floor plans and neighborhoods, and more fully deploying leaders in the organization that can lead the improvement process.
“We are not satisfied with simply reaching this milestone,” he says. “We’ve created a culture of ‘always improving.’”