A few home building companies are setting a new standard by focusing and fostering long-term employee tenure. They are not offering lifetime employment, but rather lifetime opportunity. On the cutting edge of this movement is K. Hovnanian Enterprises Inc., Red Bank, N.J.
"Our CEO, Ara Hovnanian, has a vision," says Bill Carpitella, senior vice president of organizational development for the industry’s eighth largest. "If we can create an environment of learning that stimulates our associates to grow, then we have an advantage against our competition, hands down."
Two years ago the firm began to look at its employee development programs in three specific areas: attracting and training entry-level hires, defining career path opportunities for key home building and sales functions, and developing successors to top management.
"It’s not just one process, but multiple processes to get there," says Carpitella.
By any measure, Jim Driscoll would be considered a prize recruit to a home building firm. During the ’80s and early ’90s, the 37-year-old Washington, D.C. native worked his way up through the management ranks in the company his father founded, Driscoll Homes. From there, he gained more project management experience with two firms that specialized in multi-family construction.
Last August, he decided to return to single-family home building. After turning down an offer to join another firm as a regional president he accepted a job with K. Hovnanian Enterprises as a "community builder" in the company’s northeast regional operation. What clinched the deal for Driscoll? A clearly defined pathway to senior management, he says.
Driving up to Hovnanian’s training center in Edison, N.J., Driscoll ticks off ambitious plans for advancement. Along the way to the position of area president in a three- to five-year time frame, he will need to hit specific job performance levels and training goals.
And despite the pressures of managing a 220-unit development in Union Township, N. J., he plans to make several trips to the company’s training center for day-long sessions on financial management, marketing software, and leadership. Carving out the time will be difficult, but the courses are required for advancement to the company’s higher designation for community builders-the ‘mastery’ level. And Driscoll wants to advance.
This, of course, is music to Carpitella’s ears. It validates two years of planning and meetings that resulted in the July launch of the company’s Career Path employee improvement program.
Making a Road Map
The Career Path project was just one of three training and development programs introduced at Hovnanian last year. In January, the company unveiled a detailed management development program. In March it launched its Benchstrength Program, offering an intensive training period of up to 18 weeks for new hires in the areas of construction superintendent, sales associate and community administrator.
According to Hovnanian director of training and development Cathy Carrolan, the Career Path initiative was the most time-consuming program to design. The reason: it will eventually have the greatest impact on the most employees. In addition to its division in New Jersey, Pennsylvania and New York, the company operates in California, Texas, Florida, Washington, D.C. and Poland.
Carrolan and eight other members of the organizing committee began by identifying "gaps in knowledge" among the people who work in the critical construction-related jobs. They then began contemplating ways to deliver the needed knowledge and experience. The result was simple but rigorous to execute.
Using historical company data, they detailed three levels of skills, training and performance associated with each construction-related job in the company. As a motivator, they decided to offer 10% pay increases to employees who graduated to the next level. The levels are Development, Proficiency and Mastery.
"Somebody in our organization currently does not have to wait for a promotion to get a significant pay increase," says Carrolan. "What they need to do is develop and become more valuable in their job."
In July, all construction-related employees in the Northeast region were slotted to levels within their job title. Over two days, all 600 associates were introduced to the program at half-day seminars at the Edison facility. Presenting the information were not only the company’s senior managers, but also the associates from each of the construction-related jobs that served on the subcommittees. They explained that they set the skill and performance standards that form the basis of the program.
"The trust level was high, because it was presented by their peers," notes Bill Moore, a senior human resources consultant, who joined the firm in December of 1998 to organize and manage the committees that created the development initiatives.
"Career Path has been hugely positive and popular among all of our associates," says Joe Riggs, northeast region president. "It shows that when there is a road map that shows people exactly how they can improve, they are more likely to follow it."
Like Jim Driscoll, John Contrevo is a Level II community builder. He presently manages two developments-a 285-unit townhome and single-family project in Chester County, Pa., and a 183-unit development in Gloucester County, N. J. Contrevo was trained as an accountant and began working at Hovnanian as a controller five years ago. Where Driscoll represents Hovnanian’s success attracting quality new hires, Contrevo represents its success in helping talented non-construction employees get the training and mentoring they need to make the switch and to stay on track for future promotions.
"Somebody would take a look at my resumé and see a financial person and that was it," says Contrevo. "This company has allowed me and other associates to take a chance and move beyond our normal skills."
Prior to being designated a Level II community builder in the Career Path program, Contrevo was one of 40 employees company-wide invited to join the Hovnanian’s Management Development Program. Its hallmark is an individualized feedback process by which strengths and weaknesses are assessed by peers and superiors. This information then forms the foundation of an individual development program, says senior human resources consultant Lou Csabay.
"The three positions in the management development program are area president, community builder, and construction manager," Csabay explains. "A site superintendent can get in the program to become a construction manager, a construction manager to become a CB, and a CB to become an area president."
Working with his mentor, Contrevo is targeting a 12- to 18-month period to move up to Level III community builder. He plans to take two or three training seminars each month to hit course work goals, but none of that matters unless the communities he manage hit specific "line-in-the-sand" performance benchmarks in customer satisfaction, safety and several other areas.
"That is where the company benefits," says Contrevo. "It is great to have the course work. It is great to gain additional skills and additional knowledge, but it’s also important that the company get some payback."
Unlike the Career Path initiative, the management development program does not offer automatic compensation increases as part of joining the program. Getting the promotion is compensation enough, says Csabay. Likewise, the process purposely necessitates a commitment of personal time on the part of those who seek to be managers. This is also where there is no training substitute for real-world situations. Csabay and curriculum expert Carrolan drew from well beyond traditional classroom training sources.
"One of the responsibilities of an area president is to buy land," says Carrolan. "At the community builder level there is no involvement in land deals. So in the management development program, trainees must find the time to attend meetings where a potential land purchase is being discussed."
Showing the motivation to find ways to learn about purchasing land is just one of the many intangible elements of how Hovnanian associates advance through the program, says Csabay. Each protégé, as the managers in training are called, must also present their development plan to the company’s senior managers. The idea is to gauge presentation skills and poise.
"The program is innovative because it gives people new ways of getting shared learning as well as visibility in front of senior management," says Csabay. "They get invited to high level executive leadership seminars. It is a big motivator."
Nowhere has the labor shortage had a more damaging affect on home building firms than in the area of hiring full-time, entry-level positions. And, if ever there is a chance for mediocrity to creep into a firm, it is during times like these. The aim of Hovnanian’s Benchstrength Process is to provide a period of total training and fieldwork immersion for new hires that enables the firm to maintain a higher standard.
At the end of that process, which ranges from six weeks for sales associates to 18 weeks for community administrators, the new associates have been exposed to all of the training courses in Level I of the Career Path process, says training director Carrolan.
The program is offered twice each year. During its initial run last March, 10 new hires went through. Importantly, those hired into the Benchstrength program did not have specific jobs waiting for them at the end of training. Instead, says Carpitella, they are literally on the bench waiting. "The idea is that we can plug them in and they can hit the ground running," says Carpitella. "That is the way that we’ve been able to deal with the labor shortage."
Once they are plugged into the company, they are slotted as Level I associates within the Career Path process where the development continues.
The Change Process
As president of the region where Benchstrength and Career Path are being piloted, Joe Riggs is perhaps the best acquainted with their strengths. He sees the incentive-based process as a key. Training has always been available, but it has never been linked to compensation or so closely to promotions.
"We were hoping to develop a bottom-up process, where individuals in their quest to move up their Career Path road map would begin to force us to have more training available," says Riggs. "A smashing success would be turning the old paradigm on its ear."
But paradigm shifts are never easy to implement. To make this change possible, the company relied upon Bill Moore, who prior to joining Hovnanian 13 months ago was an executive-level human resources consultant for AT&T Corp. It was his responsibility to form the committees that did all of the detailed job classification work. Throughout the process, Moore relied heavily upon the principals of Total Quality Management, where the customer’s point of view is considered at all times. In this case, the customers were all of the company’s associates.
Initially, says Moore, there was some "push back" from senior management when he requested that top associates from each construction-related job title be taken off their jobs to be part of the process. "I argued that it was critical to have their knowledge and wisdom and that we could not afford to not have them involved," notes Moore. "When we began defining the skills and performance standards of Community Builders, I wanted the best CBs."
The initial committee, or "core team," was comprised of three of the company’s best community builders, three area presidents, the director of training, the vice president of land development and Carpitella, the head of organizational development. Moore facilitated the group. For several months they met every two weeks, designing the three skill level process and then cataloging the numerous Career Path requirements of community builders-arguably the most critical job in the company. Once this work was completed, five subcommittees were formed to flesh out the same details for construction managers, construction superintendents, site superintendents, community administrators and construction technicians.
"To provide continuity to the process, I facilitated all of the subcommittees," say Moore, "and each member of the core team served on one or more of the subcommittees." In the end, several key goals were accomplished right away, says Moore.
- The company implemented an incentive-based system that motivates associates to acquire more skills.
- The package of programs, specifically Career Path, showed associates detailed skills, performance and training criteria needed to advance horizontally and vertically within the organization.
- The programs lowered turnover by 28% during its first few months.
- Associate surveys indicated increased levels of satisfaction with the company as a place to work—directly impacting bottom-line productivity.
- It set up a framework to provide objectivity and consistency throughout all positions in the company.
- It has proven to be an excellent recruiting tool. To the last point, community builder and area president protégé John Contrevo could not agree more. "Career-minded individuals are naturally drawn to a company that would offer something like the Career Path. How could you not be?"