The column I wrote last month was published in Remodeling magazine online under the title The World As You Know It, and appears on this blog as Dead on Arrival. It generated some pushback from contractors who thought it focused on the negative; that it seemed to endorse the bankrupt idea of competing on price; that the opinions weren’t valid because they didn’t cite empirical research.
So I asked Les Cunningham to expand on his thoughts:
“Having been an airline pilot, I know humans can’t fly–I’m a realist. Positive affirmations are good, but they need to be salted liberally with realism,” Cunningham says. Thirty-nine years in the industry, and working with thousands of remodelers over those years has given Cunningham a deep reservoir of realism. He suggests that remodelers ask themselves “What’s my company worth today? Is it worth more than it was a year ago?”
“Yes, there’s work out there, but at reduced volume. One good operator I’m working with told me recently that he’s working ten times as hard; it takes two to three proposals to get a contract.” And price? It’s hardball negotiations. The client analyzes whether or not there’s sufficient value in doing the project, and then how much he can afford. Even though he likes you as a professional, can he get the same quality done at a lower price? Cunningham continues, “When someone’s checking your price, they can check the cost of materials and labor and calculate what percent over the cheapest alternative price you are. They make a value judgment for the money spent and quality received. There are more competitors than ever out there that are giving customers a cheaper price.”
Was Cunningham advocating that remodelers drop their prices at the first customer objection? No, he stresses. “Let me tell you a story. Two clients of mine were going after the same job. The [25%] higher-priced contractor was convinced that he was doing the right thing. The one with the lower bid actually had changed the specs and was able to charge a higher margin than he would’ve had he priced the project based on the original specs.” The difference was in understanding the customer’s wishes and his costs well enough to engineer a win-win solution for him and his customer.
But not all remodelers have command of their numbers, especially with complex design/build work. In a more competitive environment, they might find it increasingly difficult to differentiate themselves based on workmanship and service alone. Therefore, those contractors should avoid design-based variables that erode margins, and might benefit from selling products that minimize slippage–what Cunningham refers to as “bolt-on” products.
Cunningham’s company, Business Networks, collects financial statements and marketing and advertising data from its members around the country, who represent a good cross-section of the remodeling industry. The data they track is placed on a common comparison form with standardized definitions. This enables Business Networks to rank its members and generate averages based on real sales and margin targets. The peer format allows members to review and analyze the data eyeball-to-eyeball. Empirically, volumes and margins are down as much as 90%. Seventy percent of projects are now being financed from savings. Customers are increasingly concentrated among those who have the most stable employment–doctors and other health professionals, lawyers, entrepreneurs, and government employees.
There are successes, but not nearly on the scale as before. Certainly, there are pockets of stability–think Washington, DC and Austin, Texas–but in general, Cunningham says “if there’s a lot less success there must be a lot more failure. To continue in the same direction is the wrong answer. This is the first downturn where everyone’s been affected–nobody’s been untouched. But the market will return sometime…when it has disposable money available.”
Cunningham goes on to say that “until then, what a [struggling] remodeler needs to do is become a general contractor – not a specialist. You take whatever you can to break even or make money. Right now, what people seem to be buying are exterior products: windows, doors, siding, decks, and green-related items. In the boom years, the mantra was ‘if you do quality work, you’ll make a profit.’ Now, that’s a lie.”
Friday, March 5, 2010
Wednesday, February 3, 2010
Dead on Arrival
Les Cunningham has a perspective on the remodeling industry that no one else can match: He was a remodeler for 15 years, and a 14-time CotY award winner. Cunningham founded the peer-review firm Business Networks over three decades ago, and served as NARI’s national president in 2000. With a degree in chemistry and years of experience as a military and commercial pilot, Les’s rigorous intellectual standards are reflected in the way Business Networks operates. Group members have to regularly submit performance data, which is plugged into a proprietary database designed by Les and his team. The updates establish evergreen benchmarks, against which members compare their performance in a continuous process of review and analysis. So when Les Cunningham shares his thoughts, remodelers are wise to listen closely.
“The remodeling industry as we know it is dead.”
Savor that quote in the light of your own experience and what you’ve worked for all these years and your plans for the years ahead. Should you stop and consider the meaning of that for your company, your financial health and your future?
Cunningham looks to historical patterns to help explain his thinking. Remodeling in the 1960’s consisted mainly of “bolt-on” home improvements such as windows, roofing and siding. The industry as we know it today developed in the 1970’s as a housing shortage caused rapidly rising home values–providing the economic fuel for discretionary design/build remodeling. The mindset was that the good times would never end. “The 1981-82 recession put a nail in that idea,” says Cunningham. “But after the recession ended, the same phenomenon took off again.” The recessions of 1990-91 and 2001 repeated the same pattern, bringing us to the market collapse in 2008.
This time though, there is a glut of houses on the market and property values have dropped so much that the equity homeowners used to borrow against has virtually disappeared, eliminating the primary driver of discretionary purchases. With the resulting drop in appraisals, banks have almost stopped lending. “And if you have money, the last thing you’d do is spend it,” says Cunningham. “The old days of a remodeler telling a prospect ‘if you don’t come to my office’ or, ‘if you don’t give me a design fee’ are gone.”
With the severe reduction in the amount of business available, many remodelers who were order-takers in good times find themselves ill-equipped to generate business. With the number of remodelers staying constant in a severely shrunken market, competition has increased. This means that quality work is no longer the primary competitive differentiator. Cunningham explains, “The only dollars now being spent are being spent more wisely because the consumer has the Internet, which gives them more choice. Price has become the deciding issue. Now, most remodeling is needs-based. If there’s a kitchen remodel, it’s financed by savings – not debt. For those that have money, it’s in vogue not to spend. We’re not going to hit the bottom until foreclosures have been soaked up by the market; and not by speculators, but by people who live in those previously-foreclosed homes.”
So with all this gloom, what’s a remodeler to do? Cunningham says “You have to become a home improvement contractor, vis-a-vis the 1960’s…the ‘bolt-on’ products. You must be more of a businessperson, running your company by the numbers. Take every job you can get and keep your costs as low as you can.” He believes that this bodes well for construction franchises that have proven systems and a respected brand, because consumers will opt for a company that they believe will stand the test of time.
All this requires a mental adjustment to the economic realities of life; an adjustment that Cunningham fears many remodelers won’t make. Will you?
“The remodeling industry as we know it is dead.”
Savor that quote in the light of your own experience and what you’ve worked for all these years and your plans for the years ahead. Should you stop and consider the meaning of that for your company, your financial health and your future?
Cunningham looks to historical patterns to help explain his thinking. Remodeling in the 1960’s consisted mainly of “bolt-on” home improvements such as windows, roofing and siding. The industry as we know it today developed in the 1970’s as a housing shortage caused rapidly rising home values–providing the economic fuel for discretionary design/build remodeling. The mindset was that the good times would never end. “The 1981-82 recession put a nail in that idea,” says Cunningham. “But after the recession ended, the same phenomenon took off again.” The recessions of 1990-91 and 2001 repeated the same pattern, bringing us to the market collapse in 2008.
This time though, there is a glut of houses on the market and property values have dropped so much that the equity homeowners used to borrow against has virtually disappeared, eliminating the primary driver of discretionary purchases. With the resulting drop in appraisals, banks have almost stopped lending. “And if you have money, the last thing you’d do is spend it,” says Cunningham. “The old days of a remodeler telling a prospect ‘if you don’t come to my office’ or, ‘if you don’t give me a design fee’ are gone.”
With the severe reduction in the amount of business available, many remodelers who were order-takers in good times find themselves ill-equipped to generate business. With the number of remodelers staying constant in a severely shrunken market, competition has increased. This means that quality work is no longer the primary competitive differentiator. Cunningham explains, “The only dollars now being spent are being spent more wisely because the consumer has the Internet, which gives them more choice. Price has become the deciding issue. Now, most remodeling is needs-based. If there’s a kitchen remodel, it’s financed by savings – not debt. For those that have money, it’s in vogue not to spend. We’re not going to hit the bottom until foreclosures have been soaked up by the market; and not by speculators, but by people who live in those previously-foreclosed homes.”
So with all this gloom, what’s a remodeler to do? Cunningham says “You have to become a home improvement contractor, vis-a-vis the 1960’s…the ‘bolt-on’ products. You must be more of a businessperson, running your company by the numbers. Take every job you can get and keep your costs as low as you can.” He believes that this bodes well for construction franchises that have proven systems and a respected brand, because consumers will opt for a company that they believe will stand the test of time.
All this requires a mental adjustment to the economic realities of life; an adjustment that Cunningham fears many remodelers won’t make. Will you?
Tuesday, January 5, 2010
Just Because the Economy is Bad, Don't Change Who You Are
As a restaurant manager in Dayton, OH during the nasty recession of the early 1980’s, Rick Crossman learned a lesson that he applies to his 20-year-old design/build business. In that bad economy, restaurants struggled to stay busy even on Friday and Saturday nights; but there was one restaurant in town that did a brisk business throughout the week. Other restaurants, in spite of promotions and tinkering with their menus, couldn’t get consistent traffic and of course, many failed. The key for the successful restaurant was in providing its customers with predictable quality; with reliably good food and service at a reasonable price – not the lowest price, but a great value for the price.
The analogy applies to the remodeling industry in the current economic downturn. Too often, Crossman says, even a quality contractor will use the tight economy as an excuse to change his system: traveling outside his normal operating area to run any lead, qualified or not; chasing after projects he didn’t sell before the recession; cutting his material specs, or bypassing the permit process to offer a cheaper price. He begins improvising whatever it takes to get the sale--just like the back-of-the-pickup-truck contractors.
Crossman’s company, Archadeck of Southern Fairfield County (CT), serves the middle to upper-middle market. They serve the same customer with the same product they did before the recession, rather than chasing lower-priced projects. “Wherever you’re pigeonholed, stay in that hole,” he says. “Follow your process – don’t think you need to improvise to win. It’s the same customer.”
Crossman seeks to understand who his customer is and why they buy from him. During the first five months of 2009, his consumers’ attitude seemed to be finding out how little they could spend on a project. Then there seemed to be a learning curve as people started to understand how the national economy affected their personal economy. Their purchasing behavior changed from “how much” to “how well” to spend.
Acknowledging that times are tougher, Crossman believes that it’s more important than ever to qualify prospects to ensure that there’s a match with what you offer. Recently he declined to see one prospect because they lived outside his operating area. The wife called back upset that he had refused to come out for a design consultation. After apologizing for unintentionally offending her, he asked the homeowner “If this is a project I can help you with, would you be willing to do it in the winter instead of next spring?” She said yes. That was a buying signal that justified Crossman’s decision to proceed with an initial visit.
Crossman sold that project in spite of the fact that it’s outside his preferred range. But it’s scheduled to be built this winter when there’s no conflict with projects closer to home, and keeping a crew busy during the slow season offsets the disadvantage of the extra travel. But the project he sold will still have solid copper flashing and stainless steel screws, it’ll be designed to the same rigorous structural standards, he’ll provide the same warranty, and he’ll escrow the down payment rather than use it to pay invoices on other projects. His customer will receive the same product and the same service she would have received when times were good. This may be one reason Crossman’s referrals drive the majority of his business – a business which is actually ahead of his 2008 sales, even in the worst economy since the Great Depression.
The analogy applies to the remodeling industry in the current economic downturn. Too often, Crossman says, even a quality contractor will use the tight economy as an excuse to change his system: traveling outside his normal operating area to run any lead, qualified or not; chasing after projects he didn’t sell before the recession; cutting his material specs, or bypassing the permit process to offer a cheaper price. He begins improvising whatever it takes to get the sale--just like the back-of-the-pickup-truck contractors.
Crossman’s company, Archadeck of Southern Fairfield County (CT), serves the middle to upper-middle market. They serve the same customer with the same product they did before the recession, rather than chasing lower-priced projects. “Wherever you’re pigeonholed, stay in that hole,” he says. “Follow your process – don’t think you need to improvise to win. It’s the same customer.”
Crossman seeks to understand who his customer is and why they buy from him. During the first five months of 2009, his consumers’ attitude seemed to be finding out how little they could spend on a project. Then there seemed to be a learning curve as people started to understand how the national economy affected their personal economy. Their purchasing behavior changed from “how much” to “how well” to spend.
Acknowledging that times are tougher, Crossman believes that it’s more important than ever to qualify prospects to ensure that there’s a match with what you offer. Recently he declined to see one prospect because they lived outside his operating area. The wife called back upset that he had refused to come out for a design consultation. After apologizing for unintentionally offending her, he asked the homeowner “If this is a project I can help you with, would you be willing to do it in the winter instead of next spring?” She said yes. That was a buying signal that justified Crossman’s decision to proceed with an initial visit.
Crossman sold that project in spite of the fact that it’s outside his preferred range. But it’s scheduled to be built this winter when there’s no conflict with projects closer to home, and keeping a crew busy during the slow season offsets the disadvantage of the extra travel. But the project he sold will still have solid copper flashing and stainless steel screws, it’ll be designed to the same rigorous structural standards, he’ll provide the same warranty, and he’ll escrow the down payment rather than use it to pay invoices on other projects. His customer will receive the same product and the same service she would have received when times were good. This may be one reason Crossman’s referrals drive the majority of his business – a business which is actually ahead of his 2008 sales, even in the worst economy since the Great Depression.
Tuesday, December 1, 2009
A Different Take on Ethics in Remodeling
Barry Klemons built his business around a set of bedrock principles, and earned a reputation for honesty and integrity. His attention to each and every customer was legendary, so he was shocked and upset to hear through the grapevine that a former customer was bad-mouthing him and his company. It was a woman for whom Archadeck of Charlotte had built a screened porch a couple of years earlier, telling everyone what bad work they had done. Returning to his office, he found her number and gave her a call. “Mrs. Smith? This is Barry Klemons. We built your screened porch, and I just heard that you’re unhappy with our work.” “That’s right! I am unhappy,” she snapped. Barry asked what was wrong with it. “The roof has been leaking for over a year!” “Why didn’t you let us know?” Barry asked. She said “I did, I wrote a letter.” “I didn’t receive a letter from you,” he replied. “Well,” said Mrs. Smith “I never mailed it.” In disbelief, Klemons asked “why… not?” “Because I knew you wouldn’t do anything about it!” That was like a slap in the face, an unjustified attack on his character. Of course Barry had the leak fixed and his honor restored – at least in the mind of one customer who had stereotyped him as a “typical” remodeling contractor.
Evidently, a contractor’s reputation is at risk even when he does everything right (short of reading the customer’s mind). Klemons, who sold his company in 2007, was Chairman of the Charlotte Better Business Bureau. He was the 2005 recipient of the Charlotte Ethics in Business Award after receiving Honorable Mention the previous year. The Charlotte chapter of NARI, of which Klemons is a charter member, gives an annual award in his name. He’s a multiple Chrysalis award winner, and is a Remodeling Magazine Big 50 Remodeler. In addition to numerous professional awards, Barry’s civic contributions are widely recognized and lauded.
And Mrs. Smith just assumed that he wouldn’t stand behind his work.
Clearly, the public has a generic perception of contractors as unethical. The 2008 Consumer Complaint Survey, published this July, ranked home improvement/construction #2 on its Top Ten Complaints list; and our industry has had the distinction of being ranked in the top three for many years. This perception and the reality causing it places remodelers in a defensive posture before they even show up for the estimate (actually, not showing up for the estimate has become folklore, contributing to the negative stereotype).
Ironically, the customer is frequently an enabler for the problems he complains about. Not to blame the victim here, but isn’t it odd that people will allow – nay, pursue – the lowest bidder to lay hands on what is probably their single biggest asset? The 19th century author John Ruskin said, “The common law of business balance prohibits paying a little and getting a lot. It can't be done.” Yet every day, homeowners effectively conspire with those contractors who are willing to work cheaply to produce an unsatisfactory outcome for both parties. Of course, the reputation of the entire remodeling industry erodes just a little more each time this occurs. And the Mrs. Smiths of the world just assume…
The math is simple, then: The most ethical behavior is to charge more! Or to charge enough to deliver what you promise; and that should never come at the lowest price. Unfortunately, the people who need to learn that lesson probably aren’t reading this column.
Evidently, a contractor’s reputation is at risk even when he does everything right (short of reading the customer’s mind). Klemons, who sold his company in 2007, was Chairman of the Charlotte Better Business Bureau. He was the 2005 recipient of the Charlotte Ethics in Business Award after receiving Honorable Mention the previous year. The Charlotte chapter of NARI, of which Klemons is a charter member, gives an annual award in his name. He’s a multiple Chrysalis award winner, and is a Remodeling Magazine Big 50 Remodeler. In addition to numerous professional awards, Barry’s civic contributions are widely recognized and lauded.
And Mrs. Smith just assumed that he wouldn’t stand behind his work.
Clearly, the public has a generic perception of contractors as unethical. The 2008 Consumer Complaint Survey, published this July, ranked home improvement/construction #2 on its Top Ten Complaints list; and our industry has had the distinction of being ranked in the top three for many years. This perception and the reality causing it places remodelers in a defensive posture before they even show up for the estimate (actually, not showing up for the estimate has become folklore, contributing to the negative stereotype).
Ironically, the customer is frequently an enabler for the problems he complains about. Not to blame the victim here, but isn’t it odd that people will allow – nay, pursue – the lowest bidder to lay hands on what is probably their single biggest asset? The 19th century author John Ruskin said, “The common law of business balance prohibits paying a little and getting a lot. It can't be done.” Yet every day, homeowners effectively conspire with those contractors who are willing to work cheaply to produce an unsatisfactory outcome for both parties. Of course, the reputation of the entire remodeling industry erodes just a little more each time this occurs. And the Mrs. Smiths of the world just assume…
The math is simple, then: The most ethical behavior is to charge more! Or to charge enough to deliver what you promise; and that should never come at the lowest price. Unfortunately, the people who need to learn that lesson probably aren’t reading this column.
Wednesday, November 18, 2009
A Safe Attitude
Almost 40 years ago, Dennis Lawson began his working career with a giant chemical manufacturer that produced ingredients used in products from plastics to pharmaceuticals. Today he is the Health, Safety, and Fleet manager for Royal Plus, Inc. (a member of Disaster Kleenup International), with seven locations in Maryland, Pennsylvania and Florida.
Lawson recalled his first job as an industrial fire fighter for American Cyanamid in Louisiana. Not long after starting work, he experienced his first emergency – an employee was exposed to Class A poisons. The employee had been sampling process materials as part of a standard procedure performed every two hours, and had succumbed after inhaling a large amount of hydrocyanic acid gas that had leaked through a pump seal. It was not a pretty sight. By the time Dennis’ team arrived, the employee was unconscious; he had turned blue because the chemical compound was replacing the oxygen in his blood, and he had defecated in his pants. While Dennis hosed down the pump equipment to disperse the leaking gas, the shift supervisor administered CPR and first aid to revive the employee. He was then admitted to the hospital for observation. The man had come close to death, but fortunately did not suffer long-term damage. The trauma was so severe, though, that he threw up for a long time afterward, Dennis recalls.
While relieved that the employee had survived, Lawson found that he couldn’t sleep that night after his shift. The experience had made a profound impression on him, one that has lasted his entire career: Even in the face of the gravest situation, the proper response can save a person’s life. He had experienced first-hand the value of working in an environment with well-established procedures. In this case the SOP was to have a watcher/buddy nearby wearing a self-contained breathing apparatus to quickly call for help when the worst happened.
In the restoration business, everyday hazards may not be as dramatic as clouds of poisonous gas. But the restoration work environment can pose risks not found in a static manufacturing environment. Because the work site changes continuously, lack of familiarity with each location’s potential dangers alters how those risks are monitored and avoided. Procedures must not only include carefully defined tasks, but should also emphasize the less tangible skill of situational awareness. This requires a commitment on the part of the employee – an attitude of caring and vigilance.
What does it take to get employees to acquire the right attitude about safety so they can anticipate and avoid hazards? Certainly the experience of an emotionally powerful event – the sight and smell of a dying co-worker – imprinted an unforgettable image in Dennis Lawson’s mind and influenced his approach to every position since. But you can’t wait for a harrowing near-miss situation to motivate the rank and file, and you certainly don’t want to orchestrate one just to make safety training more effective!
While it would be nice if all your employees would memorize OSHA 29 CFR 1926.850(b) (Subpart T), plus the other 10,000 provisions in OSHA’s Construction Industry Regulations, the reality is that many feel invincible and view safety training as enthusiastically as they did high school homework. This is especially so if their training is about rules and regulations rather than behavior and culture. The result is a lack of caring – of carelessness – that increases the likelihood of injury and therefore the effort necessary to prevent it.
It is said that behavior influences attitude and attitude influences behavior. One of the most effective means of influencing both is through peer pressure, or validation. (Most youngsters probably wouldn’t try smoking otherwise.) Since perception of motives affects a person’s openness to a message, it matters who is delivering that message. Because of this, a rank and file employee can often be more successful influencing fellow employees than a manager. Those who demonstrate interest and aptitude with safety procedures should be recognized and used as models for desired behavior. Any employees who have personal experience, whether from a near-miss or actual injury to themselves or a co-worker, should be encouraged to share that with the group. Individuals from outside the company who have suffered serious, even disabling, workplace injuries can be recruited to speak at your safety meetings. As happened with Dennis Lawson, the more intense the emotions associated with any experience, the more likely you are to remember and care about it in the future. To help achieve the strongest emotional impact on your employees, ask your presenters to explain in detail how the injury has affected their lives. The more dramatic the message, the more potential there is for a breakthrough in attitude.
As an advocate of behavior-based safety, it is this kind of people-centered approach to management that Lawson has developed. With years of experience, a psychology degree earned over a 20-year period, and four decades of study in the art of karate-do, he feels that Royal Plus is the place where he’s finally able to use all of his talents. Lawson articulated his philosophy with a simple, but profound lesson from the revered master of Okinawan karate, Gichin Funakoshi. He said, “Carelessness comes before accidents.”
Lawson recalled his first job as an industrial fire fighter for American Cyanamid in Louisiana. Not long after starting work, he experienced his first emergency – an employee was exposed to Class A poisons. The employee had been sampling process materials as part of a standard procedure performed every two hours, and had succumbed after inhaling a large amount of hydrocyanic acid gas that had leaked through a pump seal. It was not a pretty sight. By the time Dennis’ team arrived, the employee was unconscious; he had turned blue because the chemical compound was replacing the oxygen in his blood, and he had defecated in his pants. While Dennis hosed down the pump equipment to disperse the leaking gas, the shift supervisor administered CPR and first aid to revive the employee. He was then admitted to the hospital for observation. The man had come close to death, but fortunately did not suffer long-term damage. The trauma was so severe, though, that he threw up for a long time afterward, Dennis recalls.
While relieved that the employee had survived, Lawson found that he couldn’t sleep that night after his shift. The experience had made a profound impression on him, one that has lasted his entire career: Even in the face of the gravest situation, the proper response can save a person’s life. He had experienced first-hand the value of working in an environment with well-established procedures. In this case the SOP was to have a watcher/buddy nearby wearing a self-contained breathing apparatus to quickly call for help when the worst happened.
In the restoration business, everyday hazards may not be as dramatic as clouds of poisonous gas. But the restoration work environment can pose risks not found in a static manufacturing environment. Because the work site changes continuously, lack of familiarity with each location’s potential dangers alters how those risks are monitored and avoided. Procedures must not only include carefully defined tasks, but should also emphasize the less tangible skill of situational awareness. This requires a commitment on the part of the employee – an attitude of caring and vigilance.
What does it take to get employees to acquire the right attitude about safety so they can anticipate and avoid hazards? Certainly the experience of an emotionally powerful event – the sight and smell of a dying co-worker – imprinted an unforgettable image in Dennis Lawson’s mind and influenced his approach to every position since. But you can’t wait for a harrowing near-miss situation to motivate the rank and file, and you certainly don’t want to orchestrate one just to make safety training more effective!
While it would be nice if all your employees would memorize OSHA 29 CFR 1926.850(b) (Subpart T), plus the other 10,000 provisions in OSHA’s Construction Industry Regulations, the reality is that many feel invincible and view safety training as enthusiastically as they did high school homework. This is especially so if their training is about rules and regulations rather than behavior and culture. The result is a lack of caring – of carelessness – that increases the likelihood of injury and therefore the effort necessary to prevent it.
It is said that behavior influences attitude and attitude influences behavior. One of the most effective means of influencing both is through peer pressure, or validation. (Most youngsters probably wouldn’t try smoking otherwise.) Since perception of motives affects a person’s openness to a message, it matters who is delivering that message. Because of this, a rank and file employee can often be more successful influencing fellow employees than a manager. Those who demonstrate interest and aptitude with safety procedures should be recognized and used as models for desired behavior. Any employees who have personal experience, whether from a near-miss or actual injury to themselves or a co-worker, should be encouraged to share that with the group. Individuals from outside the company who have suffered serious, even disabling, workplace injuries can be recruited to speak at your safety meetings. As happened with Dennis Lawson, the more intense the emotions associated with any experience, the more likely you are to remember and care about it in the future. To help achieve the strongest emotional impact on your employees, ask your presenters to explain in detail how the injury has affected their lives. The more dramatic the message, the more potential there is for a breakthrough in attitude.
As an advocate of behavior-based safety, it is this kind of people-centered approach to management that Lawson has developed. With years of experience, a psychology degree earned over a 20-year period, and four decades of study in the art of karate-do, he feels that Royal Plus is the place where he’s finally able to use all of his talents. Lawson articulated his philosophy with a simple, but profound lesson from the revered master of Okinawan karate, Gichin Funakoshi. He said, “Carelessness comes before accidents.”
Friday, October 30, 2009
What's in Your Contract?
Mike had built an elaborate deck for Mr. & Mrs. Smith. He always orders more material than he needs, not only in anticipation of the inevitable defective boards but because his aesthetic standards are high and wants plenty of choice. (His supplier restocks his extras at no charge because Mike is an excellent customer.) So by the end of the Smith’s project, he had accumulated a fairly good-sized stack of leftovers. After completion Mike scheduled a time to walk the project, pick up the final check and haul away the excess materials. But when he showed up he was surprised to discover that the neat pile of boards was gone. When he asked Mr. Smith what had happened, the homeowner shrugged and claimed that they must have been stolen. So they proceeded with the job review and Mike got his check; but as he was leaving he happened to glance through a garage window and saw his lumber stacked inside.
When Mr. Smith was confronted, he defended his actions by claiming that he owned the materials because they were delivered to his house for his deck. No amount of argument could unwind Mr. Smith’s rationalization, so Mike decided just to let it go. But he made an angry mental note to add a clause to his contract putting in black and white what reasonable people would take for granted.
How many painful lessons like this have you learned on the job? Have you ever had a customer refuse you access to his house electricity, or try to get one of your employees to do side work? What if you discover a rotted band board after you strip the siding off, or hit an underground tank while drilling a footing hole? Ever had a customer give you a new punch list every time you complete the last? The list goes on. If you’ve been in the contracting business for more than a few years you’ve encountered a host of unforeseen situations that have cost you time, or money, or your customer’s goodwill… or all three.
Knowing that, I’m amazed to see how many contractors still use the same old generic proposal form from the stationery store. Last year I had a new furnace installed, and the two-man HVAC contractor gave me one of these proposal forms as the contract. It didn’t meet state licensing requirements much less deal with the kinds of issues described above.
When Mr. Smith was confronted, he defended his actions by claiming that he owned the materials because they were delivered to his house for his deck. No amount of argument could unwind Mr. Smith’s rationalization, so Mike decided just to let it go. But he made an angry mental note to add a clause to his contract putting in black and white what reasonable people would take for granted.
How many painful lessons like this have you learned on the job? Have you ever had a customer refuse you access to his house electricity, or try to get one of your employees to do side work? What if you discover a rotted band board after you strip the siding off, or hit an underground tank while drilling a footing hole? Ever had a customer give you a new punch list every time you complete the last? The list goes on. If you’ve been in the contracting business for more than a few years you’ve encountered a host of unforeseen situations that have cost you time, or money, or your customer’s goodwill… or all three.
Knowing that, I’m amazed to see how many contractors still use the same old generic proposal form from the stationery store. Last year I had a new furnace installed, and the two-man HVAC contractor gave me one of these proposal forms as the contract. It didn’t meet state licensing requirements much less deal with the kinds of issues described above.
Because I’m an eminently fair-minded person (with a deep sympathy for the travails of contractors), I didn’t cause any problems for these young guys and would’ve dealt fairly with them had there been problems with their work. But life’s too short to count on dealing with nice guys all the time. It only takes one bad apple to put a well-meaning but naïve contractor out of business.
If it’s too much effort or cost to develop a custom contract for your business that anticipates and resolves conflicts caused by recurring problems, why isn’t it too much effort or cost to deal with the rump end afterwards? Talk about whistling past the graveyard! If you haven’t done so already, sit down and think about the bad times; what could you have done to avoid them? If having prophylactic language in your contract would’ve helped – write yourself a fresh new contract before the season ramps up next year.
Friday, October 2, 2009
OSHA and Residential Remodeling
Everyone in the remodeling industry knows that much of the work you do presents a risk of injury… and even death. And hopefully you know that all employers are required by OSHA to provide employees with a safe working environment. You may also know that there are 22 states (incl. Puerto Rico) that have state OSHA plans that you must follow (rather than federal) if you work in one of those states.
Did you know that each state has OSHA consultation services? This is different from OSHA’s enforcement division, which is administered by either the state or the federal government, depending on whether or not you’re in a state plan state. The Office of Consultation Services exists to educate employers and employees. They will perform site inspections by invitation only, and keep the results confidential. Small companies in high-risk industries (such as remodeling contractors) are given priority, and the service is provided for free. According to OSHA, “employers can find out about potential hazards at their worksites, improve their occupational safety and health management systems, and even qualify for a one-year exemption from routine OSHA inspections.”
On the other hand, the enforcement division makes unannounced inspections, and is the entity that will penalize you if you’re found in non-compliance. There are two types of inspections. One is a “focused” inspection, which looks at only a limited number of conditions for compliance, such as fall hazards, electric hazards, personal protection, and so on. The enforcement division may do this kind of inspection, but will also perform a “wall-to-wall,” which should be self-explanatory.
Many of you are paper contractors, so what is your obligation to comply with OSHA regulations? To quote: “You will be responsible for doing your best to ensure that your subcontractor complies with OSHA.” In other words, if your sub is not in compliance, and you can’t prove that you’ve taken all reasonable steps to make the sub comply (short of throwing him off the job), you will be held responsible.
This means that you will have to require the sub to
- Wear the appropriate protective gear (hard hat, eye protection, appropriate clothing, etc.);
- Use the appropriate fall protection equipment if any work is 6 feet off the ground or higher;
- Use ground fault circuit interrupters on each extension cord;
- Have at least one of his employees trained in first aid techniques, and;
- Have in place a written safety training program and hazard communication program.
If your sub is not in compliance, you should notify him in writing that he must comply before you will allow him to complete the job. Of course, if you employ your workers, it’ll be your obligation to have these practices in place yourself.
With that said, I have never heard of an OSHA inspection on a residential remodeling project in over 20 years of experience with projects around the country. But the issue is not about the low probability of being caught violating some annoying regulations. Nor is it an economic issue. The issue is ensuring that the people who work on your projects do not get injured or killed. This is a value set that should be a part of every remodeler’s culture. It’s about doing the right thing.
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