Most construction companies start out as simple closely held operations that can be run by the seat of any rational person’s pants. A unique feature of the construction industry, however, is that mom and pop businesses can grow very quickly into large complex enterprises that require professional business management skills to remain on track. This journey from “small business” to “large complex enterprise” requires an endless process of recruiting the personnel that make up the hundreds of thousands of closely held and family-owned teams. How contractors view their organizations makes all the difference in how they go about the task of building their company.
Service Provider
A construction company is a service provider. The product sold to the market is expert construction services. It is not buildings, bridges, or roads. Expert construction services are provided by a team of construction experts. It is that team of experts that make up a construction company.
Closely Held Business
Although it may seem obvious, most contractors I have worked with over the years rarely see organizational development as a management skill. They start out hiring friends and relatives to help them do the work and continue this pattern often even after their companies grow quite large and complex. They value key collaborators (usually relatives or close friends) as part of the team but seem to regard the rest of the company (both administrators and skilled labor) as employees. What they misunderstand is that the entire collection of employees are both the company and the company’s product.
Successful construction companies reflect the successful collaboration of the entire team of experts the contractor has assembled. Less successful construction companies reflect a certain lack of assembled expertise on the company’s part.
The first and most important management decisions (choices) made by the growing contractor is the recruiting, training, and motivation of the team of experts that are the company. Contractors have nothing else to sell. Professional organizational development skills separate the winners from the losers in the construction industry.
The National Football League
Perhaps the ability to assemble a winning team is no more graphic than in the NFL where organizational development skills separate winners from losers. The owners, general managers, and head coaches have long recognized that their ability to assemble and train the best candidates for each position is the essential factor in fielding a winning team. The opposition, weather, and luck only play a minor role in the season’s win/loss record. The skill level at every position, and the team’s ability to play together, are the deciding factors. Fans tend to root for star quarterbacks and other skill players (running backs and wide receivers) because rooting for personal, identifiable heroes is more exciting. But the owners, general managers, and head coaches always focus on the functional ability of the entire team.
They know that even the most talented quarterback will not succeed without a solid offensive line made up of nameless studs playing tackle and guard. Even Tom Brady can’t win games unless the line solidifies and gives him a chance to find a receiver.
They know that even Peyton Manning cannot outscore the opposition if his defense gives up 40 points a game. The safeties, line backers, and defensive backs must all be experts in their function for Peyton to be expert at his and allow the entire team to prevail. In other words, NFL top management’s task is to recruit and train a team of functional experts that support one another to win.
Functional Analysis
The professional management skill used by NFL owners and coaches is known as functional analysis. Functional Analysis, as business theory uses the term, is nothing more than looking at a team (or a company in the case of construction) as a collection of separate functions that must collaborate to succeed at the collective objective.
Each separate function is identified by the functional contribution it makes to the whole effort. (e.g. An offensive tackle’s function in football is to block the defensive onslaught and give the quarterback time to execute the offensive play.)
This function is then measured by what percent this individual function represents to the success of each play. A value is then assigned to this function, and a pay scale is arrived at.
Functional Analysis in Construction
I assure you it is the rare contractor who looks at his company from this perspective. However, as closely held construction businesses grow, the friends and family approach to filling functional positions weakens the team and limits success.
Contractors must begin to see their team as their business. It is not a collection of heavy equipment, an office building, or even the name over the door. A construction company is a team of functioning experts who provide construction services. Each function must be analyzed, valued, and recruited to assemble a successful team.
Next week we’ll discuss how to use functional analysis to assemble a winning team.
For more information on functional analysis, read more at: ANALYSIS
For a broader view of team building, read more at: TEAM
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