Survival reserve funds
Last month we looked at viable precautions to maintain your workforce and prevent bankruptcy. Construction is a very competitive, profit-making industry where you must make money to survive. There is absolutely no sin in making too much money!
Let’s look at some critical management procedures that will guarantee extra dollars in your bottom-line profits. In our industry, time is money - do the math!
I have been leading management training seminars and construction convention programs in all 50 states and most of the Canadian provinces for 40 years. I also have worked on jobsites since my teenage years and am always amazed at the amount of money wasted on wages paid for nonproductive hours: the crews start late in the morning; they spend more than half an hour for a 15-minute coffee break at 9 or 10 a.m.; half-hour lunch periods last more than one hour, and many employees actually leave the job and go to a restaurant; another coffee break in early afternoon usually runs more than 15 minutes; and they leave early to go home because they assume “pick-up time for tools” means get into your pickup truck and go home.
All this time averages more than two hours in wages lost per employee, per day. Do the math!
Fortunately, this wasted money can be saved by your jobsite foremen with commonsense management training. How much actual management training did they receive when you promoted them from craftsmen?
In addition to receiving a full eight hours of work for eight hours of wages, your foremen should wear a smile and maintain a performance record for each employee. Good workers want you to keep score. The more they do, the more they make! Your foremen should utilize every opportunity for on-the-job training to help each employee to advance and be promoted. Your database skills inventory clearly defines what employees have already accomplished, as well as what additional skills they need. This personal attention multiplies employees’ ambition and productivity - and your profits.
Offer flex-time options to suit employees’ needs or offset any interfering time commitments. You can get involved in their personal lives without interfering.
Many contractors do not permit overtime because of the time-and-a-half wages required. When you can finish an expensive task with an extra two hours today vs. coming back to finish tomorrow - do the math! This is especially critical when you have heavy equipment rented or liquidated damages involved.
Another costly waste of company dollars results from using expensive, skilled craftsmen to distribute materials and perform common labor. Think about a masonry contractor who might use bricklayers for what tenders do efficiently at a much lower cost. Do the math!
I’m quite positive that you enjoy the cost-saving benefits of pre-fabbing at your shop or at the jobsite. This provides work for your employees when your jobs are not busy and also relieves the load when the jobs are busy.
Your foremen should attend jobsite meetings and prepare detailed, one-week daily schedules. They can predict manpower needs, materials, equipment and necessary shop drawings. They should utilize float time and pre-fab options to beat critical path schedules.
There is always a better way and foremen should use feedback from employees for cost-saving value engineering. Stating two options when assigning duties, for instance - “Would you rather use a stepladder or a rolling scaffold?” - not only allows employees’ input but also respects them by being asked rather than being told.
Employee motivationAlthough it is difficult to measure the difference in dollars between what each employee actually does each day compared to what he could do, it will multiply your bottom-line profits. We call this human relations or motivation:
1. Pride is the No. 1 factor. You do not want an employee performing your work who is not proud of himself and the work he does. Keep in mind that you cannot have pride without respect. Never under any circumstances criticize or discipline employees in public, and always praise and brag about a job well-done to as many people as possible. This is recognition and appreciation.
2. Maintain a happy atmosphere on every jobsite as well as in your office and shop. The boss should always wear a smile and talk with any employee who may have a grievance.
3. Normally, the No. 1 grievance involves wages and benefits. You need to explain your wage structure to all your employees in order to eliminate resentment or jealousy. In our competitive business, each employee is worth whatever it would cost to replace him. With your management team, this involves a negotiated, detailed job description, a performance file for plus or minus performance and timely wage reviews. Seniority should be recognized and rewarded on anniversary dates, etc., but not with wages.
Jobsite employees simply do what they are assigned and must be judged by their supervisor. Unfortunately, they work on varied jobsites for different foremen who trust everything to memory. Foremen easily remember mistakes or problems; employees remember everything they did well on the job.
Some contractors use cost-coding to ensure that a foreman and his crew are meeting the estimate. Your best and fairest motivator is to rate each employee’s performance every day with a 6-8-10 on his time sheet. The foreman assigns jobsite workers their daily task and they agree how much should be accomplished in an eight-hour day. At the end of the day, they review that work and agree it is only 6, 8 or 10 hours’ work. These ratings are reviewed once each month to adjust wages equitably. All good employees want to be measured. This 6-8-10 system requires very little effort with profit-producing results.
The right thing to doLet me tell you about the most rewarding human-relations advice I received from my Pap when I was about 10 years old. If you like, you may share this with your employees, your family and your friends. It really works!
It’s very simple: Help everyone you can. Pap told me that when any situation arises where I could help someone, always grab that opportunity. You will appreciate being able to help and forever feel good about having done it. Most people will return the favor but that’s not why you do it. You do it because it’s the right thing to do.
On all our jobs we called it horse-trading. We would lend our equipment (cranes, backhoes, scaffolding, power tools, etc.) to the other trades to save them rental fees or going back to their shop. Often they would return the favor. You can easily visualize how much time and money this saves.
We also horse-traded with architects, engineers, customers and the local building departments. Your foremen should always document any horse-trading in their daily logs to prevent abuse or future misunderstandings.
All these recommendations will produce the amount of profit you deserve. Your next concern is what to do with all that money! Naturally, meeting payroll, taxes, insurance and paying your bills on time tops your obligations.
Next comes enjoying your life, your family, recreation and pleasures, but make sure to have enough cash reserves for unpredictable situations with your business and/or your family. You need to make sound investments that will grow but always produce readily available cash to resolve any crisis.
As I said, there is just no sin in making too much money!