Everybody decides to go into business for many different reasons. But there’s only one way you’ll stay in business — you have to make a profit. As a result, everyone watches their money, or at least tries, with some kind of accounting or cost-coding system.

The astounding number of contractors who go broke every year, however, shows that these money-monitoring systems do not always work. Why? By the time your numbers get through your cost-coding or accounting system, it is water over the dam! It is too late to watch money that is already spent.

Three Legged Stool: Maybe you’ve heard about management’s three legged stool. Since a stool will not stand on two legs, this analogy emphasizes the critical necessity of 1) sales, 2) accounting and 3) supervision for any profit-making business to survive. Any of these legs may be much bigger or smaller than the other two, but you must have all three for your business to stand.

Typically, there is no doubt about which person in a company is responsible for watching the first two legs. Sales and accounting require daily involvement keeping customers happy, accumulating data, entering facts and figures, payroll and collecting and paying bills.

But it’s the third leg that gets ignored. Today’s craft crisis is making it very difficult to find enough trained skilled craftsmen to produce a quality product on your committed schedules.

Watching What’s Yours: The booming economy, with too much work and too little labor, should convince most of you that someone in your company should be watching your people!

This brings up five “W” questions:

1. Who?

2. What?

3. Where?

4. When?

5. Why?

Let’s start with the last question since that is what we have been covering. If you expect to survive in this competitive profit-oriented people business, you will need to take care of your people.

The first question, however, is not so simple. This will vary depending on the size of your company, the number of employees, the type of work you perform, the areas where you work, your union affiliation and your personal background, ability and time commitments.

The best person to fill this bill is the owner. However, if you do not have the time to recruit, interview, select, hire, train, counsel, motivate and measure each employee to insure a fair and proper wage or salary, you should delegate some or all of these crucial responsibilities.

I hope you have a compassionate “people-minded” foreman or superintendent who can assume that old “G.F.” (general foreman) position that we all had back in the 1940s and 1950s. These company men had the company’s interest in mind, but always gave first consideration to their employees. Above all else, they respected what kind of ability and effort it took to perform that work because they had done it! This attitude created that invaluable company loyalty that eroded as companies began hiring outsiders in top management positions.

Selecting the right person and training them to watch your people is tough enough, but it won’t guarantee an efficient job. There are some basic checklists and measuring systems that will help that “who” accomplish our second question, “what” they should be doing:

• Learn the rules. We have federal, state and local laws and regulations covering overtime, safety, hazard communications, MSDS sheets, First Aid training, equal employment opportunities, sexual harassment, etc. You do not want any of your employees to be exposed to illegal situations. Also, you cannot afford to pay for oversights or mistakes.
• Control all necessary compliance with your weekly paychecks. Whatever documentation you want or need must be turned in before your accountant issues that employee’s paycheck.
• Use VCR tapes to orient new employees with rules, haz-com, safety policies, sexual harassment, etc.
• Have every employee enter their existing skills and abilities into your database skill arsenal. Update these inventories as they progress, and audit each employee’s status monthly to assure they are being trained.
• Use military minded pre-training (certification) similar to Home Depot and other DIY outlets. You can use VCR how-to-do-it tapes, vendor training or after-hour jobsite training taught by your own employees. Publicize these certifications in your local newspapers.
• Conduct foremen training programs to motivate and measure each employee and eliminate any unnecessary turnover of good employees.
• Keep score and schedule performance reviews with each employee, at least once a year, to discuss their progress.
• Monitor the morale of your jobsite and office employees. Remember that a smile is contagious. And so is frustration. Consider how much money that smile will make you vs. how much frustration will cost you.
• Promote from within! Use a “coaching” philosophy that offers every employee an opportunity to be trained for any position they may desire. Publicize these promotions and put that employee’s picture in your local newspapers.
• Offer flex-time work schedules to coincide with each employee’s personal lifestyle. Four 10–hour days will provide a three-day weekend every week, giving your employees an opportunity to see their doctors, dentists, bankers, school principals or have a service tech come out to their homes without losing a day’s work. This is especially critical with two working spouses — but a three-day weekend is quite enjoyable just for fun or relaxation. You also need to consider the financial savings for your company.
• Go back over this entire checklist and ask yourself, “Do we need these items? Who takes care of them now?” You should also look at what it will cost vs. what it will produce. You could even try putting yourself in one of your employee’s shoes to see if those items would make any difference in your attitude toward the company.

Question number three, regarding “where,” is quite easy to answer because it is everywhere!

This brings us to “when.” By initiating and disciplining a written checklist, you can establish daily, weekly, monthly and annual tasks that will automatically be fulfilled. You can modify my list and add any items that you feel would be important to your employees. Be sure to include a “by whom” and “by when” to each item. You can then rest assured of one very basic aspect in this competitive construction industry — when you have someone diligently watching your people, whoever is watching your numbers will be much more concerned about investing than borrowing. Adding up those nice profits surely beats analyzing financial losses!