'Golden Handcuffs' For Supers

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Construction superintendent is arguably the most important management position in a home building company. After all, this front-line manager has responsibility for the quality of the delivered product and controls direct construction costs that represent 50 percent of the selling price. Yet many builders struggle to keep supers from job-hopping around the local market.

March 01, 2005

 

 

Construction superintendent is arguably the most important management position in a home building company. After all, this front-line manager has responsibility for the quality of the delivered product and controls direct construction costs that represent 50 percent of the selling price. Yet many builders struggle to keep supers from job-hopping around the local market.

Chuck Shinn, management consultant and PB columnist, has come up with an idea to clamp some meaningful golden handcuffs on supers that will make them think twice before they jump ship: a bonus tied to warranty costs as well as the usual measures such as on-time delivery, quality walks and customer satisfaction.

"What we ought to do is put a piece of the super's bonus on the table for a year, until the warranty period expires on each house," Shinn says.

"We set up a warranty budget on the house, perhaps .5% of the sales price. At the end of the warranty period," he reasons, "the super gets a percentage of whatever is left, unspent, in the kitty we budgeted for warranty service."

Shinn suggests builders pay this bonus quarterly. All the houses completed in that quarter stay in the pot until the end of the quarter the following year. If the super builds good houses that hold up for the warranty period, he stands to collect a significant bonus each quarter. However, if he leaves his job, he loses that money. It goes back to the company.

"Sometimes, if a super loses his bonus on a house — for late delivery, let's say — that house doesn't get the attention it should from that time on, because it's bonus-dead," Shinn argues. "This bonus system provides an incentive to bring every house into the warranty period in tiptop shape."

Shinn believes supers should not do warranty work. "My super is a production manager," he argues. "His customer is the customer service department. Customer service does a quality inspection of the house before the final walk with the customer. If something is wrong, customer service corrects it.

"But with this warranty bonus structure, the super has a vested interest in delivering a house that stands the test of time, and that should positively impact customer satisfaction measurement scores, if you have a third party doing that type of measurement," Shinn says.

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