Qualified Remodeler recently asked remodelers about how they approach making changes to improve their companies — retooling them for the long term. And, in an undeniable sign of the growing level of professionalism in the remodeling industry, (as well as a sign of a slower remodeling market), almost three-quarters of the 500-plus respondents said that they are implementing organizational changes at their companies this year. Indeed, it is clear that change and continual improvement are simply part of what it takes to be successful in the professional remodeling industry.
Iris Harrell, of Harrell Remodeling Inc. in Mountain View, Calif., says her firm would qualify as one that seeks continual improvement.
The company has adopted the Japanese system of total quality management called Kaizen. This style of management has many permutations. But, simply put, Kaizen-driven organizations map all of their systems and processes with extensive documentation. That information is then fed back to management in an organized way, to identify potential trouble spots and to look for areas of improvement.
At Harrell Remodeling, which did $11 million in revenue in 2007, up from $8.5 million in 2006, the list of potential areas of improvement grows longer throughout the year. Then, at the end of the year, a handful of initiatives is identified, tackled and presented as goals for the year ahead.
Kaizen emphasizes small, incremental steps to change versus big and bold changes. For example, the changes embraced by Harrell for 2008 were limited to five and two of those were carried over from last year.
“You don’t want to change too many things at once,” notes Harrell. “That, in my experience, is the real kiss of death. If you undergo too many changes your people cannot process it all and productivity suffers.”
A Kickoff for Change
Toward the end of January, Harrell led her staff of 48 in a kickoff meeting for 2008. It was also a celebration of the company’s accomplishments during 2007.
At the meeting, the 2008 business plan was unveiled and the five change initiatives were announced. To make each more memorable, the initiatives were summarized by the acronym G.R.E.E.T.
- The company plans to “Grow” its employee stock ownership plan.
- They plan to exceed their “Revenue” target of $11 million for 2008, and start 2009 with a $1 million backlog.
- They plan to “Exceed” client expectations, which will be measured by beating their current levels of customer satisfaction ratings.
- Improve “Employee satisfaction” via a company-wide survey in June.
“We want to know if they are given the authority and the support they need to do their jobs,” says Harrell.
- Lastly, the company plans to measure and improve its “Throughput.” Throughput is defined as the period of time it takes to move a job from contract signing for design to the time it takes to get it into construction.
The key to really implementing the changes, says Harrell, is to make the goals very clear and manageable to everyone in the company.
“Any good business plan helps everyone get aligned on the changes that need to take place,” Harrell says. “Every department head and employee knows that these are the things we are going to focus on this year.”
According to Harrell, the throughput improvement helps put the company in a better position to grow. The thinking goes like this. By reducing the time it takes to move a job through the system, the company is then in a position to handle more jobs on its existing platform. This increases the company’s capacity. And capacity is the one thing that allows a company to grow.
In 2000, before the company stepped up and moved into its current, 6,000 sq. ft. space and added employees, the company was turning away jobs. And during that short period of time, says Harrell, the company became known for not being able to handle new jobs. This misunderstanding in the market persisted during a period of slow growth for the company while it stayed at the $8 million level.