The most important function of construction “bosses” after they promote themselves to “leader” is to build a professional organization that can provide their clients with expert services. After all, their team is their product. We are not selling finished buildings, highways, or plumbing to end users. We are selling construction services. It is important that construction professionals make this distinction, or we will never properly value our team members.
Promoting From Within
The construction industry is unique in that most of the expertise in construction is learned on the job. There are universities that have construction schools (I was a professor at one after retirement) but most of the key management positions in the nation’s contracting firms are filled by promotion from within. This traditional team building methodology can cloud the definition of experts and encourage contractors to rely on on-the-job-training exclusively
The Peter Principle
The Peter principle, a concept in management developed by Laurence J. Peter, suggests that people in management tend to continuously advance in positions until they reach incompetence. In his 1969 book he outlined what happens when organizations promote from within: A person who is competent at their job will earn a promotion to a position that requires different skills. If the promoted person lacks the skills required for the new role, they will be incompetent at the new level and will not be promoted again. If the person is competent in the new role, they will be promoted again and will continue to be promoted until they reach a level at which they are incompetent. Being incompetent, the individual will not qualify for promotion again and so will remain stuck at this final placement or Peter’s plateau.”
My Consulting Career: A Case Study
It occurred to me recently that, during my more than 30 years as a consultant to contractors across the U.S., quite often I was asked to teach the families of founders who were about to retire, how to run the business. Most of the clients were successful contractors that started as entrepreneurs and eventually brought family members or friends into the business. The family and friends were often intelligent, competent people who grew up in the industry but had little formal training in business management. They were therefore promoted into management according to the Peter Principle described above.
Few became highly competent in the positions they eventually held, but all of them felt they had the birthright to be there. Some founders agreed and were wise enough to realize that they “needed training”, so they hired consultants to train and teach the family and friends. The problem is that many contractors do not recognize the need for training and the Peter Principle sets in as soon as they retire and go fishing. This is evidenced by the number of management successions that are followed by financial distress.
Business of Construction
A blind spot in our industry is that many contractors do not recognize that management is a learned skill that cannot be acquired by working in a construction company. Many also fail to realize when the organization they created has outgrown their family or friend’s ability to manage it. This too often leads to project failures, accumulating losses, infighting, and low morale.
Team Building
- In consulting with founders seeking to retire, the first step is to take a candid look at the executive team. It is the team’s combined skills, integrity, and dedication that will take the retiring founder’s company into the next generation. The founder needs to understand that they are no longer going to be the critical success factor. The team they assemble will.
- It is therefore critical to provide the team with the business management skills they will need to succeed. And to motivate them to pursue the founder’s vision. In many cases I would send one or more managers to business school. I usually brought aspiring leaders into the home office to be up close and personal with the real decision makers. And I would assign a multi-year reading list.
- Contemporary business management requires a set of skills that perhaps even the founder didn’t possess. I would often go outside of friends and family to attract business professionals to the company to provide professional financial management, organizational development, and strategic planning expertise. It is usually uncomfortable for founders to do this so outside independent advice is often necessary, which requires the founder’s support.
- I always advised that the next generation of leadership should have the benefits of a board of experienced business advisors to help conceptualize and articulate the company’s long-term vision of success and help guide the company and management to successful outcomes.
This is what I mean by team building, not business games or throwing a party so team members get to know one another better. Although, these are also beneficial.
Next week the supremacy of profitability over top line growth. See you then.
For more information on leadership teams, read more at: TEAM
For a broader view of the management training, read more at: TRAINING
To receive the free weekly Construction Messages, ask questions, or make comments contact me at research@simplarfoundation.org.
Please circulate this widely. It will benefit your constituents. This research is continuous and includes new information weekly as it becomes available. Thank you.
