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Tuesday, April 29, 2008

People and systems -- the (one sided) balance

This graphic is from the EllisDon web page article headlined: "EllisDon Ranks Number One on Canada’s 50 Best Employers List". We can learn a lot from the business practices of the most successful companies in our industry.

At a recent Ontario General Contractors Association forum, Geoff Smith, President and CEO of EllisDon, a multi-billion dollar general contractor, explained some of the basics of his company's business success.

"If you don't have good people on the projects in your area, your head office won't save anything," he said. "Systems never cause success. You either have good people and set them free or you don't."

He added an interesting second point. "People say 'we're here to enhance shareholder value. That's BS -- no one gets up in the morning to enhance shareholder value.

"We think that why our company exists, why did the founder start the company; it is what (our employees) love doing -- it's the kind of people hanging around it . . .The employees come first. This is the company which exists for its employees."

He added: "We are going to be entirely open about this company; we share the financial statements with all the employees, we share all the problems -- (and) by the way, you are accountable . . . you are accountable not to me but to everyone else who works in the company."

So, here are the three basic themes of EllisDon:

  • Set them (employees) free
  • Make the priorities based on the employees
  • Give them all the information and make them accountable to each other.
"Some days it works better than others," Smith concluded.

Aha, here is the balance, the opportunity, and the challenge in business -- finding the right balance in business overall and, in specific, marketing construction services: Finding the right balance of freedom and accountability -- and using systems to enhance rather than restrain your vision, whether you are an employee, owner or both..

The challenge is finding this right balance; in my first (ill-fated) business expansion, I didn't understand the practical application of business systems and management 'controls' -- and only discovered almost too late the limitations of seat-of-your-pants management without proper accountability.

Too much marketing is done that way -- a salesperson pitches an idea and you purchase it (worse, a telemarketer encourages you to advertise in a Police Journal and you say yes, or you don't know your employee is authorizing the wasted purchase) -- or you try this or that, hoping something, anything will work. You really need a planning and budgeting process; a set of rules and processes to guide your decisions and strategies, and if you wish to move from these plans, have an understanding of how and when the deviation is appropriate and wise. sadly, I see most construction businesses don't get the basics right and either market haphazardly, not at all, or with inconsistent and ill-planned methodologies.

But equally, despite my previous blunders about not understanding systems and processes, I may have been closer to being on the right track than executives in charge of many autocratic and bureaucratic organizations.

"Systems never cause success." Geoff Smith says. He is absolutely right. We need them, of course, but you should not be ruled by them. Just make sure if you set your employees free, you also have systems to ensure they are accountable to each other.

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