What are the most important keys to success for a
homebuilder? Answer this question right and you are half way there. Use it to drive your
organization’s priorities and your success is assured. There are two simple,
strategically important steps you can take to lead your organization in the right
direction.
First, identify between three and six key success drivers.
Some key drivers, such as customer satisfaction are common to all builders, but the rest
are as unique as your company. John Wieland Homes and Neighborhoods, a 1995 NHQ winner,
convened their senior managers to define the company’s key performance drivers and
related measures in light of the company’s mission and core values:
- Profit as measured by gross margin and net income.
- Production as measured by cycle-time, budget variance, and
safety ratings.
- Quality as measured by in-house inspections, percent of
zero item closing punch-lists, and number of service requests.
- Customer satisfaction as measured by a series of feedback
surveys.
During an annual strategic planning retreat, senior
managers review the key performance drivers and make changes to reflect changes in the
competitive environment and long-range thinking.
The next step is to focus the organization on improving
the performance of key success drivers. Shea Homes Arizona, a 2000 NHQ winner, in its
annual strategic planning process, sets annual and long-term stretch targets for each of
their key drivers. Action plans detail how each improvement will be accomplished.
Driver |
Measures (selected) |
2000 Goals |
Stretch Target |
Customer Satisfaction |
- Overall satisfaction
- Referral rate
|
- Improve overall satisfaction 2%
- 21% referral rate
|
- Exceed expectations for 50% of customers
- 50% evangelical buyers
- 40% referral rate
|
Products and Services |
- Cycle Time
- Warranty response time
- Zero defect homes
- Defect prevention
|
- Reduce cycle time 10%
- 72% zero item orientations
|
- Reduce cycle time 35%
- 100% zero item orientations
- Six Sigma error rate on key components
|
Efficiency of Internal Operations |
- Gross/Net Profits
- Return on assets
- Return on equity
- Sales per employee
- Warranty costs
|
- Reduce warranty items over 14 days by 2%
- (proprietary financial goals)
|
|
Trade Partner Relationships |
- State quality award applications
- Adherence to Shea behavior standards
|
- 20 quality award applications prepared, 7 submitted.
- 90% of trade partners meet behavior standards
|
- Quality award applications submitted by all major
trades.
|
Employee Satisfaction |
- Employee satisfaction
- Absenteeism
- Turnover
|
- Reduce employee vulnerabilities to 0/20 and max 10/15
- Improve employee commitment index by 7 points
|
- Employee commitment index of 85
|
Aligning and motivating the Shea organization toward the key drivers is reinforced by a series of
coordinated efforts. Management shows that they are serious about key drivers every month
when they review results with all employees. Pay bonuses for achieving the improvement
goals gets everyone’s attention. Each associate’s development plan and personal
performance evaluation is guided by business driver priorities.
You can send an equally powerful message. Now is the time for you
to harness the power of key success drivers to guide the success of your company.