Building Your Team – Board of Advisors
Continuing our Science of Construction Business Management Series: If this confounded pandemic has taught us anything, it’s that running a construction company during this era is complex. The ever-grinding shortage of skilled labor, the scarcity of materials caused by medical absenteeism at suppliers around the world, the supply chain kinks leaving the crew without supplies at the job site, unexpected cost inflation spikes, the lagging demand for numerous types of nonresidential construction suppressing bid prices, has contractors pulling their hair out trying to decide how to go forward in this absurdly complex post-pandemic business environment.
It Takes a Team
Because our industry is largely populated by privately held and family businesses, most do not have a formal board of directors. Most contractors sit alone in their office with no one to help figure out the ins and outs of this crazy world we find ourselves trying to navigate. This may have made sense when we were small, and the business equation was simple; develop a low bid on a local project, gather some tools and helpers into a pickup, build the job, submit an invoice, get paid and move on to the next project. You probably don’t need a board of advisors to help with that.
But as I said last week, successful contractors grow, and when we produce multi-millions in annual revenues on multiple projects the business equation starts to get more complex. We need more tools, more helpers, more pickups, more information, and more knowledge. We can no longer drive the team to every job. We can’t be there to supervise and motivate. We need help. And to compound the problem, add COVID-19 to the mix with its supply interruptions, cost inflation, and labor shortages and many contractors suddenly find themselves in a morass of complexity.
Board of Advisors
Last week we likened the skills it takes to put together a successful construction company team to those of legendary college football coaches. Their ability to recruit, train, and motivate talented individuals and mold them into a team is the same skill needed to be a successful construction company CEO.
As a construction company grows and takes on multiple, larger, and more complex projects the CEO must continue to expand and develop his team. The foreman in the trenches now needs a superintendent to help him see the big picture. Project managers are needed to take the CEO’s place in the field and manage projects from start to finish. A professional estimator is needed to craft more complex bids and we need advice when the back and forth of contract negotiation starts to assign risk. The company becomes more complex, but we still sit alone in our office juggling a thousand balls in the air. It is time to admit that we could use some help. (Its Lonely at The Top) We need independent thinkers to fill the gaps in our experience and education. We need some independent advice. Who should we recruit? What should we ask them to do? How can we motivate them to help us?
Qualities of Effective Advisors
Independence
Some closely held companies already have boards of advisors or directors, but many are not effective because they are not independent of management. Boards consisting of predominantly internal company managers, family members, or people closely associated with the business are usually too close to everyday operation of the company. They may be biased and, perhaps, not objective enough to accomplish the tasks of setting attainable goals and measuring management’s performance. Effective advisors must be independent.
Varied Skills
Match potential advisor’s skills with the challenges the company must overcome.
• If staffing is a major near term challenge the company faces, it might be valuable to include a human resource professional in your advisory group.
• The contacts that successful “headhunters” have could come in handy during the skilled labor crunch we are now facing.
• A local banker who deals with the industry but is not currently involved with the company might be just the added insight needed to get the company to the next level.
• Successful entrepreneurs in an unrelated industry could be very helpful in getting over the “growing pains” that all emerging companies suffer.
• Senior-level business professionals can be valuable in helping a construction CEO see “the big picture”.
Willingness to Serve
• The reputation of the contractor for integrity, drive, and the company’s positive impact on the local business community motivate independent professionals from varied walks of life to serve on advisory boards.
• A contractor’s connections to the local business community enables him to contact potential advisors in a professional setting. Membership in industry associations, local booster clubs, country clubs, and even religious organizations is a good way to meet potential valuable advisors.
• Advisory meetings should be held about once a quarter. Less than that renders advisors insignificant (and they know it), and more than that could prove to be an imposition to successful outside business associates and compromise their independence; or they may become like an “insider”.
• Financial remuneration should be anything that potential advisors consider respectful. Your industry associates may have some suggestions.
If you’re a contractor at the helm of an emerging company who finds yourself immersed in this post-pandemic market, seriously consider expanding your organization by adding an advisory board to help you do your job.
Our business science series continues next week.
Just released my latest book The Secretes To Construction Business Success Published by Routledge https://bit.ly/3G9ornf.
For a deeper look into the Boards of Advisors, read more here: BOARD OF ADVISORS
For a broader view on leadership read more here: LEADERSHIP
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