When I reviewed one of our construction company’s Profit and Loss (P&L) statements a few months back, I could not determine if we were making money or not. We had lots of projects going at one time, some of them from $3 million to $10 million in size. When you’re doing this much volume, you better know how much you’re making or losing on a monthly basis or you will be out of business in short order.
We have a fantastic chief financial officer who always keeps our P&Ls accurate by holding a meeting every Friday morning with the management team and the project managers (PMs) to update the cost of completion and job progress reports. This helps him accurately predict our P&L situation.
Looking at this company’s P&L, I could tell this was no longer happening. I asked my partner, and the president of the company, if his team and our CFO were having weekly financial reporting meetings with his PMs to keep track of the numbers.
“I’d love to, boss,” he said, “but our vice president and project managers are so busy that they don’t have time to stop what they’re doing to go over the reports.”
I was frustrated. “So, you mean to tell me our P&L statements could be off as far as $1 million and your PMs don’t have time for meetings to help us find out?” I asked.
I proceeded to tell him a variation of a story I originally learned from author Stephen Covey, who reminds us that we must “Sharpen the Saw.” Here goes:
Sweat dripped from a woodcutter’s forehead as he struggled with a saw, barely making a dent in the tree he was determined to cut down. His friend walked up and asked him why the job was taking so long.
“My saw is too dull,” the man replied. So his friend asked him why he didn’t sharpen the saw. “I don’t have time,” the man yelled. “I have to cut this tree down by the end of the day.”
Of course, there’s a huge flaw in this logic. I proceeded to explain how our company president can put this lesson into action:
“As contractors, we should learn from the man trying to cut down the tree with the dull saw. In fact, you and the tree cutter have the same problem. You are so focused on the end game that you are forgoing the important details that are essential for success. Had the guy with the saw taken the time to listen to his friend, he would have learned that the job would’ve been more efficient and effective with a sharp saw. Had you continued your weekly meetings with our CFO and PMs, we would know our finances and where we need to make adjustments to ensure we are making money.”
The company president listened to me (always a good idea) and learned what was necessary to keep the job and the numbers on track. He and our CFO are now holding regular meetings with our PMs to get our numbers straight. The process is working.
Regular meetings bring accountability to your team. Every Wednesday afternoon at our manufacturing operation, we hold three separate meetings: A production meeting with shop floor managers, a research and development meeting with our team of engineers, and a sales meeting with our sales team.
When we go through the meeting notes from the previous week, we ask everyone if they followed up on the action plans. It always amazes me how often I hear comments like, “I just left a message for so-and-so this morning,” or, “I was out there looking at that piece of equipment earlier today and got the serial numbers off it. I will call this afternoon and make sure we have the right parts for it.”
These comments indicate that the team members know they will be held accountable for carrying out their duties each week. That’s good. But they also make it sound like everyone’s waiting until the last day to follow up. That’s not so good. It makes me wonder how long action plans would remain idle without the weekly meetings.
So, what can you learn from the man with the saw?
The process of using collective brainpower is what it takes to drive a company. Good meetings include:
- Insuring everyone feels comfortable suggesting ideas
- Insuring everyone is honest in their discussions
- Realizing you are not always right by letting people disagree with you
- Sharing all issues openly so people will feel more invested in your company
- Encouraging and letting people know it is safe to take risks
There should not be more truth in the hallways, than there is in your meetings.
The biggest takeaway is that your company should hold regular strategic planning meetings. For construction companies, I recommend that you do this first thing Monday morning with your PMs and management staff. Informing one another of action plans for the week sets the tone for the team to carry out their weekly duties. Financial meetings should be held separately from the strategic meetings and can be any day of the week. At our company, we like to do them on Friday mornings.
Keep your team on the right page by “Sharpening the Saw” every week and see where it takes you.
Damian Lang is CEO at Lang Masonry Contractors, Wolf Creek Construction, Malta Dynamics, and EZG Manufacturing. To view the products and equipment his companies created to make jobsites more efficient, visit his websites at ezgmfg.com or maltadynamics.com. To receive his free e-newsletters or to speak with Damian on his management systems or products, email:email@example.com or call 740-749-3512.