AT THE FOUNDING OF AMBER Homes, the "team" was very small indeed.
"We started the company literally in our family room-me, my wife, and Tom {Hoban, who was construction manager at the time}. We'd go around the table and discuss floor plans, development issues, and more," remembers Jim Harmon, president and CEO of the Aurora, Colo.-based builder. "As the company grew, I found it a very effective way of involving people in all aspects of the company."
Amber Homes has reaped the benefits. Last year, the company generated $31 million in revenue on 213 closings, making it the fastest-growing builder in terms of closings and the second fastest in revenue growth among this year's Fast Track home builders.
How did Amber do it? Through a collaborative approach that encourages speed, decision making by empowered employees, and information sharing across traditional barriers.
"The major advantage [to teaming] is brainpower," says Michael Beyerlein, Ph.D., director of the Center for the Study of Work Teams at the University of North Texas in Denton, Texas. "In a hierarchy, the thinking and the decision making is done at the top. The bottom is told what to do. You don't engage the full brainpower of the organization."
In contrast, teamwork does just that, allowing a builder to draw on the expertise, knowledge, and skills of everyone: the corporate office, field staff, subcontractors, and even buyers. Armed with more information, team members make better decisions individually and as a group, creating a company that's smarter, faster, and better.
For proof, just look at David Weekley Homes, which has increased revenue percent since 1999, hitting $938 million in 2001. Teaming starts at the top for this Houston-based builder, where a "home services team" (a.k.a. the corporate office) supports a division team, which manages the project teams that oversee individual David Weekley communities.
But teamwork is more than a word at Weekley--it's a culture. Everyone must read books such as The Wisdom of Teams or Nuts! Southwest Airlines' Crazy Recipe for Business and Personal Success. Every new "team member" attends Weekley 101, a two-day orientation that includes building a Lego house as a team. Project managers must know both builder and sales jobs before being hired. The information sharing doesn't stop there: All project managers meet quarterly as a group with senior managers, where they share results and best practices, offering new solutions to problems others maybe encountering.
"It really pays dividends in our ability to execute," says Mike Humphrey, vice president for operations at the large, private builder.
Fellow fast-growing builders agree. "Not one person can do it alone, especially in construction, where there are so many segments," says Brian Hanly, president and CEO of Syncon Homes, Roseville, Calif. "If they don't work together, the customer is going to have a terrible experience.
INSPIRING EMPLOYEES
Builders with big plans know employees can have a critical impact on a company's growth curve. "You're only as good as your weakest link," says Zudi Karagjozi, CEO of Kara Homes, which leapfrogged to the top of this year's Fast Track list.
That elusive people factor is why smart fast trackers plan for growth with their employees just as they do with their construction or accounting systems.
They don't always discover what they expect. In early 2000, as Sarasota, Fla.--based Lee Wetherington Cos. prepped for expansion, the president and CEO surveyed his buyers and his employees. "I was ready to go into a growth mode, so I wanted to make sure I had the systems in place," says Lee Wetherington. "What I found was that I had some very unhappy people."
He addressed the problem in multiple ways, replacing top management, instituting profit sharing (budgeting $400,000 for this year alone), and establishing monthly team-building exercises to redevelop the cooperative, motivated company he sought. "It's not just about going to a seminar once a year and that's it," Wetherington says. "It's about changing the culture of the company."
The builder believes he has. "The [employee] surveys are 180 degrees different than they were," he says. So are his numbers. Customer satisfaction is up 8 percentage points. Revenue surged 57 percent from 2000 to 2001, outstripping a 47 percent closings jump.
"It's all about people," Wetherington says. "If they're not customer service--oriented internally, they're not customer service--oriented externally."
Creating that type of attitude within a company can be challenging. As any builder knows, "there's a natural animosity between sales and construction," says Peter Shaddock Jr., president of Piano, Texas--based Sotherby Homes, which has "worked hard" on teamwork in that relationship. Buyers are benefiting, and so is the builder; Sotherby has hit the Fast Track four years running.
Money helps. Fast-growing builders with financial incentive plans say the plans motivate employees toward higher performance, more cooperation, and a greater focus on the bottom line. "People are more willing to lend a hand to each other," says Matt Thompson, president of Thompson Homes, which established profit sharing in 1999. Since then, customer service has improved, revenues have increased (up 16 percent in the past three years), and an experienced work force has become one of the company's greatest assets, thanks to generous cash bonuses for performance.
"Obviously, we have no turnover," says Thompson.
That's a huge advantage for the West Chester, Pa., builder, who can forge ahead without the slowdown of replacing experienced employees. "Everyone chases the dollar," says Thompson. "It's easier for me to reward employees and know they'll stay with us for the long haul."
If employees do leave, the cross-training often involved in teamwork eases the transition. Ole South Properties learned that in a tragic way after a division president died last year. "It devastated us for three months," says John Floyd, president of the Murfreesboro, Tenn.-- based builder, where now every employee must be cross-trained in another job. "We need to have more people in the know," he says.
MAKING PARTNER
Of course, fast-growing builders rely on far more people than just their employees. They also use tradespeople, subcontractors, and suppliers, who all affect the costs, quality, and ultimate profitability of a home.
Recognizing that, fast trackers big and small are applying the team approach outside their company, turning subs into trade partners by offering more business and opportunity for involvement in return for the subs' commitment to the builder.
"That's really the next frontier of teaming," Beyerlein says. "It's really a shift from a contractual arrangement to a relationship arrangement."
It's also an acknowledgment of what many in the home building business have realized all along. "A subcontractor needs a builder as much as the builder needs the subcontractor," says Randy Myers, president of Brownstone Homes in Portland, Ore. "Builders need those subcontractors to expand their business."
Trade partnering can make that expansion go far more smoothly. Before Brownstone adopted the concept, the fast-growing urban in fill builder was plagued by punch list items and timing problems that delayed moving dates by months. But no more, thanks to bimonthly trade partner meetings and a new scheduling approach. "Everyone knows we're in this together," says Myers, who expects to close 189 homes this year, a 70 percent increase from 2001.
Getting subs involved early can solve problems before they emerge. At Amber Homes, Harmon turns to a subcontractors' council for insight and expertise. "We can't have these things happening in a vacuum," believes the builder, who says he's saved time and money thanks to sharp-eyed subs who've pointed out technical issues--problematic air duct placements, for example--in floor plans.
Growing big builders like the system too. "People suspect us of trying to drive the price down, but we're trying to drive the price down by driving the costs down [for everybody]," says Kevin Hake, vice president and treasurer of K. Hovnanian Enterprises in Red Bank, N.J., which saw quality improvements when it implemented trade partnering in the Northeast. "We feel we'll all work more efficiently by concentrating volume."
They're certainly saving time and money. According to Jim Hoffner, director of quality assurance for Hovnanian's Northeast region, the builder has reduced cycle time by 14 days per home in communities with trade partnering, potentially saving the company $1-7 million in carrying costs.
BONDING WITH BUYERS
The final--and potentially most important--member of a fast-growing builder's team? Buyers.
"We're not in the service industry where we're serving buyers every day, but they're an integral part of the process," says Andy Mitchell, president of Syncon's Nevada division. "They're going to be in the process for a while, and they're going to be talking about us."
Some fast trackers spell out their team orientation for buyers, so customers know what's expected. "We explain to them that they're part of the team, that we understand [building a house] is an emotional process, and that if they have a misunderstanding, we want to work out the misunderstanding," says Wetherington, who believes the approach has kept his company safe from expensive lawsuits and time-consuming arbitration.
That …
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