December Portfolio

Advice, information, humor and more!

Better Leadership at Your Firm

Management guru Peter Drucker shares with us some keys to successful leadership. Contractors would do well to keep these ideas in mind when making leadership decisions:

Management cannot create leaders. It can only create the conditions under which potential leadership traits become truly effective. Without these conditions, leadership qualities are repressed.
The right management practices go a long way toward recognizing, cultivating and using whatever potential of leadership there is in a management group. These qualities require no genius to bring out — just the consistent application of the necessary management practices.
Placement and promotion are the most crucial people-decisions management makes. These decisions should never be made on the basis of opinions or on potential. They should always be based on a factual record of performance against explicit goals and objectives.

Improved Timesheet Accuracy

In this tight labor market, contractors need to place a high value on their employees. The accountants monitor personnel matters very closely and need timesheets that are accurate and properly coded. One particularly pragmatic contractor went so far as to include “Wasting Precious Company Time” (code 4500) as one of the activity codes for his timesheets. But that wasn’t good enough for his fastidious accountants; they demanded an even more specific allocation system. So per the accounting department’s direction, code 4500 was expanded thusly:

4500 Being late for a meeting

4501 Trying to appear knowledgeable at meeting

4502 Preparing for break

4503 Preparing for lunch

4504 Preparing for end of day

4505 Vicious verbal attacks directed at coworker

4506 Vicious verbal attacks directed at coworker while coworker is not present

4507 Thinking about scratching one’s self

4508 Scratching one’s self

4509 Feeling lackadaisical

4510 Contemplating the merits of feeling lackadaisical

4511 Bitching about lousy working conditions

4512 Bitching about lousy pay

4513 Bitching about supervisor

4514 Bitching about personal problems

4515 Miscellaneous bitching

4516 Covering up a costly mistake

4517 Not even actually at work

4518 Stealing company goods

4519 Using company phone to make long-distance personal calls

4520 Using company phone to make long-distance personal calls in order to sell the stolen company goods

4521 Thinking of lies to put on timesheet

Boost Sales Staff Productivity

All contractors want to increase their sales staff’s productivity. But what’s the best strategy to follow to accomplish that goal?

According to the good folks at Learning International Inc., Stamford, Conn., traditional sales concerns — forecasting skills, territory configurations, training priorities, compensation strategies, etc. — are no longer the answer. Improvement of sales productivity is more than simply comparing sales revenues to sales expenses. Companies that concentrate solely on the bottom line can get lost in the shuffle. A Learning International research study revealed that emphasizing customer satisfaction has some of the greatest impact on sales productivity. Based on the responses of 300 sales managers, the study concludes four of the top 10 productivity-boosting activities were customer-centered practices that go beyond the scope of typical sales responsibilities.

But even with adding an accent on customer service, sales productivity remains a complex issue that has many executives doing a balancing act. Now they struggle to balance bottom-line pressures with rising customer expectations. Although the study indicates there’s no simple formula for increasing sales productivity, companies can start by focusing on four areas:

Market strategy and focus. These define and shape the organization’s response to the marketplace. Specifically, it centers on making long-term commitments to customers and employees, developing lasting relationships and providing effective service.
Sales force composition and fitness. This area determines the sales force’s character and performance capabilities. Activities relate to structuring the sales operation and improving performance.
Sales systems and controls. These regulate responses to the marketplace by establishing prices, tracking progress, controlling expenses and providing motivation.
Front-line effectiveness. This makes it possible for the sales organization to respond to customers’ needs on a daily basis.

Low-cost Housing System

Remember how excited you’d get as a little kid when families on your block bought a major appliance for their homes? You didn’t give a rat’s rump about the dishwasher or fridge or water heater or whatever — your only concern was the really cool fort you’d be making with the box in which it was delivered.

A Canadian company has taken the concept quite a ways further. DuraKit Shelters offers actual houses made primarily from corrugated cardboard. Waterproof cardboard panels are snapped into vinyl extrusions to form an “instant house” system that can be erected by unskilled labor in a day; the only tool needed is a caulking gun. The buildings are intended for inexpensive long-term temporary housing — emergency situations, remote cabins, vacation cottages, etc.

Walls can be insulated to R-20. The roof can be insulated to R-40, and will withstand a load of 66 pounds per square foot. A basic unit is about 200 square feet and comes with one door and one window, and interior and exterior finishes that resemble stucco.

The “Portfolio” staff doesn’t take the cheap ones; figure out your own dripping-with-irony crack about the cardboard house being delivered in its own cardboard box.

Busting the Retainage Myths

There are several serious myths about retainage according to data compiled in a recent American Subcontractors Association survey.

Myth: Retainage is the only way a general contractor can be sure that a subcontractor will finish a subcontract and take care of punch-list items.

Reality: Few subcontractors feel that retainage is what gets them to return to complete a job. Four out of five say that retainage is not a motivating factor in handling punch lists. Performance bonds are a far more effective means of ensuring proper completion of a subcontract.

Myth: The holding of a retainage does not affect the total cost of a project.

Reality: By a wide margin, most subcontractors say that they would be able to offer a lower price on a project if no retainage were held. How much lower? Of those who say they would charge a lower price if no funds were retained, the average discount is 3.1 percent.

Myth: Retainage is not that big of a problem, particularly since it is paid out when a job is completed.

Reality: Subcontractors commonly carry thousands and thousands of dollars in retainage as receivables and wait five months on average for payment. During that time, a subcontractor is handcuffed by that delayed capital. Instead of working on profitable projects, the subcontractor is expending resources on collection of owed retainage.

Myth: Retainage has no impact on a general contractor’s ability to find quality subcontractors.

Reality: When the construction economy is vigorous and subcontractors’ skills are in high demand, anything that ties up capital, retainage included, reduces a subcontractor’s ability to take on new work. Subcontractors overwhelmingly say that they are more likely to pursue a contract if no retainage will be held. Savvy owners and general contractors refrain from holding retainage to make the subcontractor bidding process more competitive.

Extremely Busy Holiday Season

We have a rather culturally diverse society, providing us with some wonderful benefits, not the least of which are the customary culinary delights and libations that get brought out for all the different holiday parties. There are quite a few holidays at the end of the year, and we’d be more than happy to help celebrate each one of them. (Longtime readers of this column will quickly recognize this thinly veiled attempt by the “Portfolio” staff to get extra days off with pay.)

Dec. 08 — Bodhi Day (Buddhism)

Dec. 12 — Festival of Our Lady of Guadalupe (Mexico)

Dec. 16 — Posadas (Mexico)

Dec. 19 — St. Nicholas’ Birthday (Russian Orthodox)

Dec. 21 — Suddha Ekadashi (Hindu)

Dec. 22 — Hanukkah (Judaism)

Yule (Wicca)

Dec. 23 — Emperor’s Birthday (Japan)

John Smith’s Birthday (Mormon)

Dec. 25 — Christmas (Christian)

Dec. 26 — Boxing Day (Canada, Bahamas, Jamaica, United Kingdom)

Kwanzaa (Afro-American/Canadian)