One of the biggest frustrations I have had over the years with a lot of stone fabrication companies is their unwillingness to invest into human capital. Many owners seem reluctant to hire and develop middle-level managers because they see it as an unnecessary expense. The decision to invest into middle-level managers is critical and necessary to successfully growing a business. The adage “What got you here will not get you there” rings true for most growing companies.
I see many companies that have an “org chart” that resembles an iron rake. There is the owner, and then everyone else in the organization reporting up to them. In its infancy, as a business startup gets off the ground, it is common to adopt the iron-rake org chart strategy. However, as a company grows, it must adapt and evolve. It must create and advance standard operating systems and make the decision to INVEST into a management and leadership TEAM.
Companies who do not have strong middle-level management teams are starting to feel the pain. Companies, which are built around the iron-rake org chart, will have difficulties taking on additional volumes of business. They will be limited to the individual capacities of the owner operators. They are simply not prepared to effectively handle the growth. Much of each day is spent just putting out the immediate fires that are raging, and there is not enough managerial bandwidth to proactively address root cause analysis, training, hiring and developing necessary SOP’s.
Stone fabricators seem to be feeling the pressure of the pent-up consumer demand. Workloads are increasing at a record pace and it is starting to hurt. Front-line associates are burning out from the exhaustion and the burden of working 70+ hour weeks with no end in sight.
Once a business has outgrown the capacity of the owner/operator, competent managers must be injected into the business to effectively execute and oversee the daily operations for each department. The super-control-freak owner who demands to be involved in every decision and all aspects of the business will ultimately smother the organization. They will create a company that will be limited to the individual’s capacity. Successful growth requires an investment into the right human capital to carry the load.
“What got you here will not get you there”
Let us not lose sight of the fact this increase in consumer demand is potentially a good problem. However, if the capacity challenges are not addressed and fixed it will transform into a much bigger problem that can become destructive in a hurry.
As most people close to the fabrication industry are aware, it is a unique business. Each job requires custom manufacturing. No two jobs are the same. A successful fabrication business has seven to 10 different functions (department) that have a codependent relationship. If one link in the chain fails, everyone feels the pain. Success requires consistent management and oversight to ensure each role and function is being executed correctly day in and day out.
Where should a company start developing and constructing a management team to spread the load?
Step 1 -- Top Key Performance Indicator’s(s) (KPI’s) for each department
Outline each department and identify the top deliverable for each department. What metric are the other departments counting on so they can successfully do their jobs? Put actual numbers (KPI’s) to each department’s goals. Prioritize them and try to limit it to two to three at most for each department.
Examples of KPI’s by department: (Remember KPI’s need to be relevant and measurable)
- Sales Department
- Hit sales goals - $XXXX sold each time period
- (Goal / Actual / Variance by person, by sales channel)
- Margin thresholds – XX% margin
- Project Managers
- Clean, CORRECT paperwork – NO mistakes
- Timely turnaround of processing jobs
- NO MISTAKES
- Educated customers
- NO MISTAKES
- Timely turnaround of processing jobs
- Done right, first time
- On time
- NO MISTAKES
- Happy customers
- NO MISTAKES
- Timely processing AR/AP/Payroll
It should be an eye-opener how important “NO MISTAKES” are in each role. Why? The cost of mistakes and rework is one of the biggest enemies of a fabrication business. Customers are only paying for the job to be produced one time. All other additional attempts are at the expense of the business. OUCH!!
Step 2 -- Identify the WHO
- One person needs to be responsible for this area of the business (department); if two or more people are in the role no one will OWN it. One person needs to be accountable to the results.
- Delegating with confidence
- Don’t delegate to a moron – the manager/supervisor needs to have the DNA to perform the role
- Try before you buy …. One of the biggest mistakes I see is over promoting someone from within into a role
- A great source for department managers may be someone already on the team (even from other departments)
- Instead of promoting someone blindly into the role I would suggest coming to a mutual agreement to temporarily performing the role for a period to see how it goes (they may hate it, they may love it…). This allows both parties to test the water. This also insulates against demoralizing a previously high-performing employee by over promoting them.
- You may be surprised how often a person, who thought they wanted to be a manager, opts out once they start performing the role
Step 3 – Develop a scoreboard
- This is the easiest step of all, take the KPI’s that were established by each department and make a scoreboard
- If your company isn’t currently tracking the KPI, it may require some work on the front end
- For each department’s KPI
- Define the goal
- Show the actual performance
- Calculate the variance (red or green)
- As time goes on, the colors will start telling the story; where the company is exceling and where it is being challenged
- Assign the data officer – this position may become your company’s MVP
- Daily, weekly, monthly tracking
- Data officer should constantly evaluate and fine-tune the data collection with certain criteria in mind
- Light up the scoreboard
- Scoreboard should be very public for all to see
- Data officer is responsible for making sure it is updated each day
Step 4 – Communication (rhythm and cadence)
- Establish standing, predetermined manager meeting that will happen each week at the same time (Ex. Monday 10:00 a.m.)
- Routines and discipline of standing meetings create necessary organizational alignment
- Firm start and stop times (probably 30 minutes or less) establishes guardrails.
- All department managers required to attend
- Each manager comes prepared to present to the team (five minutes or less).
- Goal, actual, variance (week, month, etc…)
- Explain the variance (above or below) and why?
- What are they doing about it?
- Critical -- each department manager owns their departments. Results…
- Top one to two initiatives for the next seven days
- Take necessary topics offline if needed
- Respect everyone’s time
For a front-line employee seeking to advance their career this may become one of those moments in life where the door of opportunity is right in front of you. Do you dare to open it, step in and raise your hand and simply state, “I can and want to help…”
For the business owner, the decision to invest into the necessary human capital and infrastructure is one of those decisions that will ultimately determine the company’s fate. The push back I often hear is “This is a lot of work.” Yes, it is. So are the 70+ hour work weeks burning out the team, aggravating customers and making no real progress from one month to the next. There are no shortcuts to success. My suggestion is to work smarter by intentionally developing and building more managerial bandwidth inside your organization so the company can successfully capitalize on the growth opportunities that are banging on the front door.
Cheers, Eric Tryon