According to Merriam-Webster’s Dictionary, manage is defined as follows:
1: to handle or direct with a degree of skill b: to treat with care c: to exercise executive, administrative, and supervisory direction of; 2: to work upon or try to alter for a purpose; 3: to succeed in accomplishing
Watch, on the other hand, is defined thus:
1: to keep under guard; 2: to observe closely in order to check on action or change; 3: to be on the alert for
As a leader of your company, which definition fits you best? Do you manage your custom building company or are you simply an observer watching what happens?
If you answered that you manage your company and do not just watch, how do you manage? As I work with custom builders I constantly run into three different types of management styles and in many companies all three management styles are used by the same person. These are the crisis manager, the problem solver, and the problem preventor.
I find that most of the time many custom builders are crisis managers. They act like firemen, running from one crisis to the next. They jump on whatever problem is the hottest and react to whoever is screaming the loudest. The crisis manager is too busy fighting the fire to even see what the problem is.
The second type of manager is the problem solver. The problem solver not only fights the fire but also understands the problem and works on solving it.
The third type of manager is the problem preventor. These managers not only fight the fire and solve the problem, but they also takes steps to ensure that the problem doesn’t occur again.
Let’s look at examples of the three management styles:
It is Friday afternoon, and your plumbing contractor comes into the office expecting to pick up a check. Your accounting department informs you that they do not have a check this week for the plumber. The plumber is upset and states that his company will not be back to finish the job they were working on until they get paid. Since you are really behind schedule, you need the plumber to work on the job on Saturday. Here comes the crisis manager: You go to your accounting department and have them immediately write a check to the plumber. The manager is happy because the crisis is over and the plumber will be on the job as planned.
But why did the plumber expect a check on that Friday afternoon? The problem solver takes the time to find out the cause of the problem. The company has a policy that trade contractors are required to meet with the superintendent on Monday and present their invoice, which will be paid on Friday. The problem solver finds out that the plumber followed the procedures. He met with the superintendent on Monday and presented the invoice. The cause of the problem is that the superintendent never got the invoice into the office. The problem solver not only wrote the check but found out why the problem occurred.
The problem preventor takes the next step–he develops systems so that this problem will not occur again. The superintendent is given an envelope to keep on the dashboard of his truck where he can put all of the invoices he receives. A procedure is established whereby the superintendent brings the envelope with invoices into the office every Tuesday. The problem preventor implemented a system to keep the problem from reoccurring.
Systems are the key to the problem preventor’s success. There are four key components to a good system:
- Goals and quantifiable benchmarks (measurements of cost, time, quantity, and quality)
- Documented policies and procedures
- Monitoring mechanisms, such as reports
- Feedback for continual improvement
This article is the first in a series that will address how you can manage your building company successfully using systems and reports. In my next column I will explore setting up a financial management system.
Steve Maltzman, CPA, is president of SMA Consulting in Colton, Calif. He can be reached at smaltzman@smaconsulting.net.
