Because total quality builders are more productive and build homes more efficiently, it's no surprise that they also enjoy higher profits than other builders. Five recent National Housing Quality Award winners average more than twice the net income and have more than a third higher gross margins than builders surveyed in the NAHB Business Management Committee's 1997 Cost of Doing Business Study. This study cites average net income before taxes of 5.1% and gross margin of 18.5%, whereas the NHQ builders achieved an average net income of 11.2% and gross margin of 25.5%.
Other advantages are hard to miss. For
Shea Homes San Diego, sales per employee have topped $1,200,000.
Triple Crown, Harrisburg, PA sales from referrals grew from less
than 5% to over a third of total sales in two years. Other winning
builders report 6% sales conversion ratios, sales cancellation
rates under 11%, an average of less than two service calls per
home, and "would refer" customer satisfaction ratings
over 95%, to list a few.
It makes sense that total quality builders
attain superior results because total quality companies in other
industries also enjoy real economic gains. Hypothetical investments
in Malcolm Baldrige National Quality Award winning companies
outperformed the Standard & Poor's 500 by 2.4 to 1,
according to the U.S. Commerce Department.
A U.S. Department of Labor study tracked
the financial performance of 600 companies starting six years
prior and three years after winning a state or private total
quality award. Compared with a sample of average companies for
the same period, the operating income of total quality companies
are 48 percent higher, sales are 24 percent higher, income per
employee is 20 percent higher, and stock appreciation is 50 percent
better. Benefits became most significant one year prior to winning
the award and accelerated in each of the three years following.
Mark Hodges of K. Hovnanian, a New Jersey
builder and 1997 NHQ Winner, puts it this way: "Our Company
has changed profoundly since we committed ourselves to pursuing
excellence through quality. Not only because of the tangible
improvements we have been able to make, which have been substantial.
Not simply because our customers like us better, or because the
relationships with our stakeholders have improved. It’s
the feel of the place that’s different. It is our determination
to execute properly, our unwillingness to be satisfied with ‘adequate’
performance."
Every builder who commits to the quality
process can achieve superior performance and the resulting benefits.
Total quality is an organized way for you to bring focus to what
is important for your company's success. In doing so, your
company becomes increasingly more efficient, productive, and
profitable. Now is the time to profit by rising to the next level
of quality.