Management Consultants for Contractors continually provides innovative, practical, and top-quality management consulting services that provide investment value to our clients–small-to-medium-sized contractors.
Our consulting services are predicated on improving the profitability and competitiveness of our clients by creating a teamwork environment in the company and training key personnel to become better business people and managers.
We not only advise, but Management Consultants for Contractors also helps implement our recommendations through the dedicated teamwork of our consultants and our clients’ employees.
Employee Relations Assessments
If you are an owner or key manager, you are probably one of the last to know how your employees/coworkers feel about the company. It doesn’t have to be that way. Have you ever wondered why your employees don’t seem to be motivated or care about your company? The reasons why may surprise you. Consider conducting a confidential survey that evaluates the conditions that may be affecting the overall attitudes and motivation of your employees.
Management Consultants for Contractors’ employee relations assessments identify those issues that may be preventing your employees from being peak performers. Our reports also include any recommendations that may be needed to meet the motivational needs of your employees.
Management Consultants for Contractors has analyzed the many different types of bonus plans tried by contractors. While a few have been effective for a short time, many have failed to produce the types of results that upper management expected.
While we have certainly seen many different plans, there are probably only three in common use–profit sharing, job-by-job plans, or discretionary bonus distributions.
Profit sharing plans prove ineffective time and time again for many contractors. While a profit sharing plan is certainly a nice perk or employee benefit, it hasn’t proved to be a performance driver. There are numerous reasons this is so. Among them is not sharing any financial information until the end of the year. This delay prevents the employees from seeing what effect they have on the company’s success. However, the major problem with profit sharing plans is lack of trust in the final numbers. There are too many things beyond the employees’ control that affect the bottom line, such as the cost of office overhead. Most employees believe that upper management can and will manipulate the numbers to the owners’ benefits.
Job-by-job plans are usually based on sharing a job’s excess profits. The problem with this type of plan is that the company distributes all the excess profits but has no choice but to absorb all the losses. This plan brings a definite risk that the company will be paying out bonuses on a job when, as a whole, it is losing money. Job-by-job plans also do not reinforce teamwork throughout the company.
Discretionary distributions may make the owner feel good, because he knows that he is sharing excess profits with the employees. But the employees often don’t fully understand how their own performance affects the amount of the bonus that they receive. Because the connection between performance and reward is not well defined, performance is not maximized.
Management Consultants for Contractors custom designs each bonus plan based on the goals and objectives of the client Company. However, all the plans include the following criteria:
The client Company’s operations must be profitable.
The plan focuses on what that particular group of employees controls
Benchmarks are established against which performance is measured.
Performance numbers are shared with all employees on a periodic basis.
The plan drives field productivity to make the client Company more profitable and competitive.
Do you have a functional or a non-functional organization?
Non-functional management is built on the knowledge, abilities, and interests of one or a few individuals. Positions are molded to fit people, rather than training people to fill positions, and lines of authority tend to be governed by penalties. There will normally be a definite lack of consistency in management.
The non-functional organization is run on personality. Those individuals with the strongest personalities are the ones who assume the most power, frequently resulting in conflicts. In a non-functional organization, there are not clear, written rules stating what authority the various functions have. In addition, it is rare for these people to be held accountable for their actions.
Positional responsibilities will be fluid and tend to vary form time to time. In addition, there will often be shared or overlapping authority. It will be virtually impossible to exercise control through delegation and accountability. In fact, there is almost never any really effective delegation of authority, responsibility, and accountability in non-functional companies. There is no control, and when there is no control, profitability suffers. The inconsistencies of a non-functional structure will normally cause a loss of morale and motivation, along with a decrease in productivity and profitability.
Another characteristic of non-functional organizations is the lack of depth when it comes to staffing. There are usually no provisions made for the absence of key personnel. Vacations are difficult, at best. Temporary incapacity of a key individual is a disaster, in most cases. Retirement is impossible, or will cause major disruptions in the organization. There can be no succession planning, since all of the authorities, duties, and responsibilities are associated with the person, not the position. And any decline or withdrawal of ownership involvement can have serious consequences for the company’s effectiveness and profitability.
Functional management is the most effective form of organization–and therefore management–because it is designed around functions, rather than people.
Individuals are tailored and trained to fit the position, instead of changing the nature of the position to fit the individual. Each function has its own responsibilities, separate and distinct from every other function. The functions never overlap and the scope never changes to fit an individual. Individuals are chosen to fill functions based on their ability, knowledge, training, and experience.
Functional management builds team spirit because each function operates within its own limits and each must communicate, cooperate, and coordinate with all of the other functions. This is particularly important in a business where the owner(s) is trying to reduce the actual time he spends in day-to-day operations of the business.
All of the functions, taken together, form the organizational team. Like any team, the organizational team is measured in terms of the quantity and quality of its teamwork. The teamwork will, in turn, affect the quality and quantity of each individual’s personal performance. This concept of teamwork is critical to the idea of a functional organization, and is one of the major differences from a non-functional organization.
In order for this new organization to operate effectively, everyone must be functioning within his or her areas of responsibility and all must be working towards the same goals. Individuals, at all levels, with the authority to make decisions will ensure that the total effort is efficient, effective, and profitable.
In functional companies, authority can be delegated, along with accountability; however, ultimate responsibility can not be delegated. Each task is performed in its proper work area and is grouped with related tasks into jobs or positions. Related jobs and positions are grouped together into departments or sub-functions, which in turn are grouped together into major operating functions.
Individuals are then selected to fill positions, at all levels, based upon their ability, knowledge, skills, and experience. Individuals are selected to fill function head and major sub-function head positions based upon their qualifications and their ability to coordinate the activities within their areas of operation.
The Job Descriptions for each functional or sub-functional position will list all of the authorities, responsibilities, and duties for each position. Therefore, both the Functional Organizational Chart and the Job Descriptions are used to hold the positions, and the individuals who fill those positions, accountable for the operations of that function.
Management Consultants for Contractors has helped restructure several companies around their functional needs and can objectively help your company.
Forecasts & Budgets
An annual sales and income forecast supported by operating budgets is one of the first steps towards creating the benchmarks used to measure team and individual performances. The following may best explain the primary reasons for developing an annual plan:
The components of the forecast are new orders, sales, direct cost of sales, indirect cost of sales, gross margin (gross profit) contribution, overhead expenses, and net profits before taxes. Knowing these components enables management to calculate the true cost of doing business.
The break-even point for each estimate is easily calculated. Once you know your costs and estimate jobs based on direct and indirect costs, you’ll be in a better position to negotiate the final price and will know when the desired price is too low.
With an annual forecast in place, you can perform several “what if” scenarios and see what the impact is on your bottom line. You can actually forecast your net profits at the end of the year at any point during the fiscal year. You don’t have to wait until year-end.
An annual forecast establishes goals for the company. Management becomes more goal-oriented.
An effective annual forecast is more than an annual sales target. That annual target is broken down by quarters and then by months based on the seasonality of your business to create a pathway to reaching that annual goal.
An annual plan supported by a sales forecast and operating budgets to arrive at an anticipated net profit figure is a process that creates a proactive decision making environment. Management is more likely to direct and control the business instead of just letting it happen. This proactive environment helps minimize the impact of factors over which you thought you had no control in the past.
Proactive is a term heard frequently today and is often misunderstood. The very nature of the term suggests that you have to be able to anticipate what is going to or what should happen next. It is not possible to be truly proactive without having defined a goal or end result. We all know the negative cost impact to a construction project that is not properly planned. Can your company realize its true potential without a plan?
Most all of Management Consultants for Contractors’ consulting engagements involve the development of an annual plan if the client does not already have one in place.
Break Even Analysis
When you are negotiating a bid, do you really know what your break-even point is? Do you know for sure when the price is too low? Do you know how to adjust your mark-ups when you are bidding a job that has a higher percentage of labor or materials or equipment than your normal project? Management Consultants for Contractors can teach you how to calculate your break-even point for all types of projects. The first step is to identify your true costs through the forecasting and budgeting process.
Incentive Compensation Plans
If you are looking for an incentive compensation program to reward top sales performers and/or to provide additional motivation to others, consider one of Management Consultants for Contractors’ compensation plans. This may be particularly necessary if you are currently paying your salespeople on pure sales volume without consideration to the project’s gross profit. Each of our incentive compensation plans is custom designed to meet the objectives defined by the particular client.
Skill-Based Wage Classification Plans
Have you heard your employees complain about the rate you pay a new employee who has better skills than they do? Do you find that some of your field employees have lost the connection between their skills and the value of those skills as it relates to how much they are paid? Is the pay scale a constant complaint from your employees?
Management Consultants for Contractors can help you install a defined skill-based wage classification that places the burden of acquiring the skills and the pace at which they are learned on the employee. These types of defined plans help remove any perceived inequities in your compensation system and place the burden of how much each one earns on the employees’ shoulders.
Peak Performance Systems
Are your employees’ performance expectations clear and measurable? One of Management Consultants for Contractorsâ philosophies is based on the following:
Does management provide enough information to the employees so that they can measure their performance or the collective performance of the company?
Do your field employees know what is expected of them other than to “do your best”?
Do your Superintendents/Foremen know how much time or money was estimated to perform each phase of the project?
Is the performance measured or tracked throughout the project against the estimated time?
Do your field employees know at the end of the day whether they performed at an acceptable level as compared to the estimated productivity level?
Are your Project Superintendents involved in forecasting the costs to complete the job on a monthly basis?
Do you know how the company is performing, based on timely financial and operating reports that are meaningful?
Do you measure the financial performance or your company against an annual plan?
If you answered “No” to any of the above, then you are not reaping the financial rewards of a measurement managed company! Peak performance requires methods to measure performance and provide feedback on that performance.
When performance is measured, performance improves. When performance is measured, reported, and shared, the rate of improvement accelerates.
It is difficult to hold employees accountable for their performance if their areas of responsibility are blurred. Many companies’ job descriptions are no more than duty/task lists. Management Consultants for Contractors’ job descriptions are functional in nature and broader in scope than any duty/task list. Each job description is integrated with superior/subordinate positions and includes specific measures of performance for the critical aspects of that position.
A primary complaint of employees is that reviews are either not held at all or are not held on time. Most employees tend to perform to the level of known expectation. They want feedback from their managers regarding their performance.
Performance review forms should be integrated with each position’s job description. Generic forms are difficult to complete. If a form is difficult to complete, it will most likely lie on the manager’s desk and the review will be conducted late.
Management Consultants for Contractors designs all review forms around the responsibilities of a particular position. Review forms are integrated with our job descriptions. This increases accountability and furnishes a better tool for managers when they are providing formal feedback to an employee. Guidelines are also furnished on how to conduct an effective review.
More in-depth training is also available through Management Training Institute on how to conduct an effective employee review.
Do you often feel alone? Wish you could bounce a tough decision off a mentor or someone who could give you an objective view not clouded by your emotions? Have you had a recent setback that shook your confidence? Or, do you need someone to challenge you to reach for even higher goals? You might benefit from having a personal coach. Call Management Consultants for Contractors.