Photo credit: ©istockphoto.com/Jesus Ayala

Think back to your own business decisions. How many were costly and should have been better? You will naturally face many more critical decisions in the future. Some of them may be minor but many of them will determine your continued success and survival!

Most contractors started their businesses with a reasonable amount of knowledge and experience. Some worked at one specific trade, some worked multiple trades, and many had some office and management exposure. Many took construction-based college classes to increase their profit potential.

Wouldn’t it be nice to capitalize on that knowledge base? What are you missing? What I discovered through my jobsite exposure and consulting is the No. 1 factor for failure — a lack of human relations or people skills.

The very first question I ask of a client is, “Where is your written chain of command?” Very few have one or follow it if they do have one. That’s what I call the biggest hole in your bucket. Your growth and success are extremely limited without a company chain of command.

I get all kinds of excuses from contractors without a written, visible chain of command, such as:

• We don’t need one, everybody knows I am his boss.
• That’s a silly game they play in the Army.
• We have one written but I don’t remember where I put it.
• There’s one hanging on the wall in our shop. I doubt if anyone ever read it.
• We have one that has never been revised because no one follows it anyhow.

I’m not talking about a small percentage of contractors. This is the majority, most of whom struggle to hire and keep good employees. This is especially critical for exceptional employees with hopes, dreams, and realistic goals to earn more and be promoted to management positions. They will leave to find a better opportunity at another company. They also will share their plight with friends.

When do you need to post a written chain of command? When you hire your second employee or have your spouse in your office. Your chain defines responsibility — who is responsible for whom. An employee’s supervisor is the only one who can tell him what to do or correct him when he is wrong. No one can please two bosses. If you obey one, you might displease the other.

Relatives, Employees with Seniority

The two worst offenders who give orders but accept no responsibility are relatives and employees with seniority. You can easily understand why a new employee would obey their commands. Of course, the offenders will not accept any blame and never pass on any extra effort or accomplishment for that abused employee.

I’m sure you would agree pride is very critical for yourself as well as for your employees. Your work will show it. You also know that you never criticize anyone in public. Imagine an employee who did exactly what he was told and then was brutally criticized in front of other employees. Would you quit if that happened to you? You must realize this is a very common occurrence when no written chain of responsibility exists.

Although they are not always rigidly enforced, most union labor agreements clearly define the responsibility of trade foremen, supervisors and management personnel. It works very well.

If you have any doubts about a written chain of command, discuss this privately with your employees. We are going to discuss specific responsibilities and effective supervisory techniques for motivation, discipline, performance files, wage reviews, task training, safety, team building and positive customer relations in future articles.

Do not overlook utilizing these people skills with your office staff. It is critical that every employee realizes who his supervisor is. Only that person can tell that employee what to do because he is responsible for that individual’s performance. Anyone may ask another employee to do another task. He may decide to do it or ask his supervisor for permission. The supervisor should do a complete time study of all the employee’s duties and responsibilities. The supervisor can then assign whatever duties each employee has the time and knowledge to perform, on time.

Job Descriptions, Wage Reviews   

Written job descriptions, such as the one on this page, should be kept in each employee’s performance file. All extra performance or negative reports must be discussed in private with that employee and entered in his performance file. This file is used for wage reviews when items accumulate or a minimum of once per year. Any incident not entered into the file should not be mentioned or discussed at these reviews! Do not discuss anything from memory; we tend to remember anything negative that costs us money, rather than positive incidents.

A written job description and performance file should also be utilized for foremen by your traveling superintendent, project manager or you, if you visit your jobsites.

Proper wages are very critical for continued good performance, yet most contractors are confused when establishing wage scales. As you assign tasks and duties, always remember that employees with experience and the knowledge to make profit-oriented decisions are worth more money. And every employee is worth what it would cost to replace him.

Beware of overpaying for seniority. You are proud of your long-time employees and should honor them with public recognition on each five-year anniversary. We held summer family picnics and a Christmas party each year to meet with employees’ families and brag about their seniority.

Probably the most effective management tool is to reward exceptional performances with a flattering title. This costs absolutely nothing but it adds prestige and power to relationships with your other employees and your customers. Titles also are very impressive to families and friends. How many of your top executives are worthy and would be very proud to have a vice president moniker beside their name? It doesn’t cost a cent but consider what it’s worth.

I hope now you realize why we call human relations a top profit-producing priority. Throughout our great construction industry, few contractors teach or demand team-building tactics and morale-building motivation. Good employees appreciate praise and reward for a job well-done. They produce your profits and will provide the stamina and strength for survival and success in today’s struggling economy.

Good human relations are worth far more than they cost. Talk with your team!  

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