Make Residential Construction the Industry of Choice

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Home building's best jump ahead of the talent curve as our industry plays catch-up with others.

October 01, 2003

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Ten years ago, few builders sought to understand the pulse of their employees. Such concern was missing from the top 10 priorities of most builders, crowded out by building and selling homes with the people on hand. Plenty of others were waiting to replace them, as abundant human talent existed.

Today, though, the residential construction industry is beginning to understand - intellectually and emotionally - that a company's only real competitive advantage in the marketplace is its people. And that the amount of available talent for hire in the field and in the office is in short supply. Companies spend serious time focusing on people issues because doing so can make the greatest difference between being a good company and a great - and hugely profitable - company.

Studies show that businesses that excel in employee satisfaction issues reduce turnover by 50% from the norm, increase customer satisfaction to an average of 95%, lower labor cost by 12% and lift pretax margins by an average of 4%.

Most CEOs and business owners in home building intellectually recognize that achieving employee satisfaction can give them a substantial edge but fall short of supporting the required strategies and tactics in this area. Why? Few leaders are comfortable with the people side of the business. That's OK. No one is asking you to be the Jack Welch of home building. You need only to have a minimum personal competency in this arena and to complement your strengths with staff or assistance to ensure proper execution on these critical issues.

The Best of the Best

Who works for home building's top 50 companies - the best of the best - in terms of employee satisfaction?

  • Employee tenure averages just less than five years.
  • Female representation averages 38%.
  • Minority representation averages 15%.
  • Representation of employees older than 55 averages 12%.
  • The average ratings by surveyed employees on a five-point scale (regarding statements of employee satisfaction exclusively) ranged from an incredible high of 4.975 to a low of 4.286.

Now, let's look at what these top 50 offer their associates:

  • 21% offer stock options.
  • 21% allow job sharing.
  • 76% pay quarterly bonuses.
  • 91% sponsor a 401(k) plan.
  • 40% allow telecommuting.
  • 76% provide flexible schedules.
  • 86% offer tuition reimbursement.
  • 12% offer domestic partnership insurance for same-sex couples.
  • 71% spread profit sharing throughout the organization.

This give-and-get relationship between a company and its associates centers on value. A recent Hudson Institute study revealed the six principal factors influencing employee commitment to an employer: fairness at work, employer's care and concern, employee's daily satisfaction, an environment of trust, corporate reputation and interesting work.

How do we measure commitment? The difference between substantially committed and less committed employees comes down to one thing - their use of discretionary time. Everyone wrestles with distractions during the day - from socializing by the water cooler to Internet surfing to personal calls. Employees who minimize these distractions give their employer a full day of commitment. Committed employees give you greater return on your investment and significantly higher productivity - 25% higher compared with their less committed counterparts, studies show.

Beyond Builders

Harnessing the people power within our industry sets one organization apart from another, an important goal in today's competitive home building landscape. On an aggregate level, though, how does home building look as a career choice to new graduates or business veterans? Are we - or can we become - an industry of choice for those seeking a fulfilling career today?

Fortune magazine annually lists the companies most admired for their people focus. If we compare the processes and activities at the most attractive work environments in home building with those at Fortune's best, the story is simple: Residential construction has just begun to create people-friendly businesses.

Representation of females and minorities at Fortune's best averages 33% and 25%, respectively, and both are found in senior management and throughout the rank and file. Employees older than 55 are represented well at companies such as Wal-Mart. Employee tenure averages eight years. But the real difference is the Fortune companies' focus on and commitment to these themes:

 

  • Institutionalizing vision and values
  • Efficient recruiting
  • Diversity at all levels
  • Leadership and communication

  • People development
  • Comprehensive group benefits
  • Community contributions

Let's discuss a few of these. First, each organization's values and principles are clear, well-communicated, linked to individual performance and consistent in their message. Perhaps most important, management walks the talk.

Second, leadership and communication are paramount. Appraisal.com CEO Mark Yellen calls himself "chief evangelist" and spends 40% of his work time with employees, listening and communicating. Eli Lilly CEO Sidney Tauree spends five days a month involved in significant human resources issues. Lilly also conducts performance feedback sessions quarterly with all employees.

Third, group benefits that boost morale without battering the bottom line exemplify employer focus on and commitment to employee needs. Pfizer offers on-site yoga classes, a convenient medical clinic and hair salon, massage therapy during work hours and three weeks' vacation beginning the first year. Microsoft offers infant-care leave for males and females, up to $10,000 in adoption assistance, paid maternity at 100% of compensation, fitness-center availability, long-term-care insurance for the ill at home and company-funded meals in-house.

Those offerings might seem impossible in our industry, but employee development - the most critical benefit a company can offer - certainly isn't. Our industry has made great strides in improving employee skills, identifying career paths and offering stimulating work environments. However, the bar is set very high in this area, and we have lots of room for improvement.

For example, Johnson & Johnson associates participate in a Lunch & Learn program. Career paths exist for every position in the company, the most talented employees participate in an advanced development program, and every managerial position has a succession plan. These activities create daily mental stimulation for employees as well as a pool of qualified candidates to meet the company's future needs.

AFLAC offers on-site degree programs; scholarships for employees, spouses, children and grandchildren; and life-skills training in financial management, health issues, elder care, etc.

Improving how our industry deals with human capital clearly is essential for our future success. We are moving in the right direction, and our perception of people issues is changing, too. In the past five years, many home builders have recruited top human resources professionals from companies such as PepsiCo, General Electric and Bausch & Lomb. These companies emphasize people planning and processes as keys in creating a competitive business advantage.

Additionally, residential construction companies are surveying their employees more than ever before to keep executives current on the pulse of their personnel.

Residential construction remains a hot growth sector while much of the economy still struggles - certainly a selling point for current and future employees. Now is the time to become more progressive and proactive in how we maximize our people's contributions to the business.

The standard of excellence still resides outside of our industry. The best companies in the world understand that valuing human capital pays.

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