Challenging Construction Cultures to Think Differently

Some years ago, I visited with a large contractor who shared how they were able to quickly and permanently achieve behavioral change for a critical and chronic cash flow problem. The solution was simple, brutally effective and there are valuable lessons to be learned from their experience.

The problem stemmed from project managers not taking ownership of the monthly pay request to the client and passing it off as “accounting’s problem.” They were measured on schedule and budget, but not cash flow. As long as the budget and schedule were on track, they didn’t worry about billings. The end result was that most jobs were underbilled, creating cash flow issues. The contractor became known as a slow pay, resulting in difficulties in attracting the best subs for their projects and paying higher prices from their material vendors.

The contractor tried a number of different solutions, working one-on-one with the PMs, having classroom education sessions about cash flow, bringing in outside consultants and educators, etc. Nothing worked. Things would get better temporarily and then the PMs would revert back to the old behaviors that lead to the problem.

The solution was simple, quick and devastatingly effective: The owner, in a fit of anger, bought the largest flat panel display he could fit on the company cafeteria wall. On it was displayed a descending value listing of most underbilled PMs. The bad cash flow problem fixed itself virtually overnight.

Imagine the internal conversations, one PM looking another in the eye and saying, “Because you’re not billing as aggressively as you could be, I can’t pay my vendors and subs on time and you’re messing me up. Do your job!” This was an effective self-policing solution to the problem, and the needed behavioral change was both quick and permanent. You may think the public shaming a bit harsh, but you can’t deny its effectiveness and results. Now the company not only pays on time, but almost always takes discounts for paying early, attracts the best subs and pays the lowest prices for quality materials.

Here's how and why it worked, and the takeaways we can we bring to our next improvement initiative:

Believe in your employees and understand human motivation — Humans are social creatures, generally want to do good, win personally and win as a team. Many of us will let ourselves down before letting down another. To win, not only do we need to know the score, but also understand how our own personal behaviors move the team closer or further away from the goal of winning. As a leader you must believe this to be successful changing behaviors. Simply telling an employee what to do is only a temporary fix and behaviors will ultimately revert back to what they were before. To make the behavior change permanent, you should help the employee understand how their individual behaviors impact the success or failure of an important improvement initiative.

Find the right measure to achieve the goal — Many of us have heard the sayings, “You get what you measure” and “Tell me how I am measured, and I will tell you how I will behave.” In our careers and work history we’ve experienced the unintended negative consequences of a bad measure. Aligning the right measure with desired outcome is absolutely critical. In this example finding the right measure was easy because there is a direct causal relationship between underbillings/overbillings and cash flow in a construction company. It is not always that easy and care must be taken to think the measure through, ensuring the measure inspires the needed behavior change without negative unintended consequences.

Be transparent and communicate — I’ve talked to some in construction who keep performance metrics very close to the vest, and don’t share information outside of a small group of owners and execs. Though they have their reasons for doing this, it is shortsighted, and leads to employees with poor morale, because they can’t see the score and understand how their behaviors help themselves and the company win.

Why are professional sporting events fun and exciting? Because everybody, the audience, teams and individual athletes can see the score and the clock. Athletes will pull themselves inside out to put their team on top before the clock runs down. Imagine instead if there were no scoreboard, no clock and no purpose to the play — all would eventually get bored and leave. The same is true with regard to our companies. When I walk into a company with flat panel displays in public spaces showing key metrics, I know I’ve walked into a vital company, committed to continuous improvement, making it a great place to work for the employees, providing excellent goods and services to their customers and being a leading competitor in their market.

Succeeding with any implementation or improvement initiative requires understanding and belief that your employees want to do good and win, aligning the right measures to achieve the behavioral change, being transparent and communicating why this is important and how your employees can help. If you can be effective in these three areas, getting the behavioral change needed to guarantee success becomes much easier.