Keeping the Team Together

Thomas C Schleifer, Ph.D.

“A closely held construction company can be defined at any given point in its life cycle as the sum and substance of its experience. Almost all of that sum and substance has been created by, and resides in, people, particularly and proportionately among the firm’s senior managers. Sum and substance include the talents, abilities, and attributes of a manager. When key people leave a closely held construction enterprise some of the ‘essence’ of the organization is lost.” (The Secrets to Construction Business Success, Schleifer and El Asmar, Routledge, 2022, p.232)

Your Team is Your Product

• Knute Rockne said: “The secret to winning is working more as a team, less as individuals.”
• Vince Lombardi said: “Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.”
• Henry Ford said: “If everyone is moving forward together, then success takes care of itself.”

I say: “Part of the sum and substance of a construction company’s experience becomes institutionalized, including general attitudes toward customers, work ethics, values, and so on, because the key people have woven them into the “fabric” of the organization, by mentoring, training, and leading by example.  A portion of the sum and substance can be transferred from one person to another with deliberate and diligent effort.”

Culture

I call the institutionalized portion of this sum and substance the culture of a construction company. Culture becomes evident when “everyone is moving forward together” as Henry Ford put it. “Success seems to be taking care of itself”. 

Culture, however, is only the institutionalized portion of the sum and substance of the qualities that reside in the collective individuals that make up the company at any given moment. A company’s culture, therefore, is fluid and dynamic as the individuals that make up the sum and substance come and go. If a company hopes to achieve long term success, it must carefully manage this coming and going so that the culture is not eroded or eradicated. 

Turnover

Personnel turnover has two manifestations – 1. Expected and 2. Unexpected. 

Expected – Turnover due to retirement is expected. Just as a company’s culture ages into maximum efficiency, key members of the team will begin to retire. Since the onset of the COVID-19 pandemic the retirement of the baby boomer generation from the construction industry has reached crisis proportions. This accelerated the exit of the majority of the generation that built and staffed the modern construction industry, taking with them much of their accumulated insights into business and project risk, the development of innovative processes, methods and actions born out of years of company-specific experience, masterful hiring selections, and solutions to personnel issues resulting from an ability to read between the lines. If senior management understand the critical nature of the collective culture that runs their companies, they have been taking steps to insure the transfer of the culture from one generation to the next. If they have not, it is critical to take steps now. 

A portion of the sum and substance (customer relationships, client contacts, production, and process knowledge, etc.) can be transferred from one person to another with deliberate and diligent effort [for more detail see Secrets…Chapter 16]. To salvage as much of the sum and substance as possible, it is best to have at least three years to enact the process for middle managers, and four to five years for senior managers. For key senior management departures, five years of preparation is a minimum. This timing provides the luxury of the person leaving being able to train, teach, and coach their replacement. During the final year or six months of this period, it is recommended that the replacement be promoted into the position with full responsibility. This allows the advantage of having the retiring person still there to mentor, assist, and encourage. 

Expect the Unexpected – When your team is intact and succeeding, the tendency is to overlook the new hires, ignore the junior staff, and become dependent almost exclusively on trusted long-term employees. This approach can leave you vulnerable to the unexpected departure of key team members. If you expect the unexpected, however, you can turn unexpected departures into creative opportunities. Building an organization knowing that key personnel are not permanent inspires top management to structure a fluid organization that can respond to unexpected departures at any level.  When key people suddenly leave your team through sickness, death, or “poaching” (which happens) you can respond creatively only if you had expected the unexpected and carefully chosen and nurtured junior staff members.

Next week we begin a new series on using financial data. 

For a deeper look into planning for the unexpected, read more here: SUCCESSION PLANNING

For a broader view into labor and labor issues, read more here: LABOR AND LABOR ISSUES

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