This week I have chosen to change things up a little bit with an article I wrote back in 2004. For contractors and those of us working with contractors this discussion of TRUST is very relevant particularly in the current competitive market. As an example, Job Order Contracting has a strong partnering component that thrives when founded in TRUST. When the TRUST fades so does the contract! I realize that I promised a blog with topics on construction estimating and this is not exactly on topic but it is very much related and relevant. Enjoy!
Transitions: All American businesses are in transition. They now operate in an environment of global competition, rapidly changing technology, and more demanding consumers. In the scramble to be more competitive, businesses are re-engineering, reorganizing, downsizing and outsourcing. The question is: How are contractors impacted by these changes and what actions can they take to be more competitive and thrive (with some it is a matter of survive) in the current economy?
Low Bid; Best Bid: Historically facility managers have had their hands tied with acquisition regulations that required the award of projects to the lowest bidding contractor. This has typically been the case with publicly funded projects. Too often the low bid winner would prove to be the contractor that made the most mistakes in their bid. There are also the stories of the low bidder capitalizing on imperfect design documents with change orders as the project unfolds.
It is true; a selection process that ignores a contractor’s past performance and awards contracts only on the basis of low bid is flawed. Experienced contractors have seen the “after the fact” failings of the low bidder and they would agree: low bid is not necessarily best bid!
Trends in Acquisition: Today contractors are being evaluated with a greater consideration of their past performance, records of quality, safety, integrity, on-time delivery and team resumes. These points are being critiqued and quantified for a fair evaluation. This is a good trend.
This being the case, the most valuable asset any contractor can have is its reputation of positive past performance and business practices. Building a TRUST relationship with customers through a proven track record is essential. The single best strategy a contractor can employ to improve business volume and profitability is to invest in the asset of TRUST.
Building Trust: So how do you go about building a high-trust business organization? You could just say that you are “trustworthy” and even profess it on the company letterhead….this has been tried. The fact is it is not enough to say it and read it; you have to be it and do it. Trust outside the company is the result of being internally trustworthy.
In low-trust organizations the operations bog down with bureaucratic rules and regulations, policies and procedures that are inefficient. An organization of high-trust reduces the social friction and encourages creativity, ideas and knowledge sharing. At the core of trust is the competence and character of the company and the people it is made up of. Investing in the competence and character of the individuals that make up an organization is an investment in trust. This is a simple premise that can have a powerful impact on the bottom line.
Investing in Competence: Investing in competence in an organization is a key component to building high-trust. Competence is an individuals level of qualifications, skill and ability to function at a task or job. A workforce lacking competence would not foster trust with peers, subordinates or with the customer. Put another way; would you allow an inexperienced steel worker to install critical structural pieces of an elementary school project? Certainly not; trust would be limited.
There is much to be said for in-house training programs that keep the communication open on the latest technologies, methods, systems and practices. Investing in education with the rank and file is an investment in the organization’s competence in the marketplace!
Likewise, investing in the human resource systems for screening and hiring construction folks is also an investment in competence. Hiring practices are important. Continuing to populate the workforce with marginally competent people will never nurture a high-trust culture. The competence of the workforce is an asset of the organization that should be maintained and upgraded.
Character”istics”: Character is equally important to building high-trust in organizations although it is more difficult to measure and quantify. An individuals character and the collective character of the organization are revealed with time and trials in the workplace. We have all experienced people and organizations with low-trust character “istics” such as impatience, duplicity, dishonesty and ingratitude. These are the opposites of the “istics” that should be nurtured and encouraged such as patience with the customer, honesty, integrity, perseverance and contribution.It is here along with a competent workforce that high-trust is built. The rank and file will follow if it is clear that these “istics” are not to be compromised at any level of the company. Eventually they will become an obvious part of the culture.
Just Trust Me: An organization’s workforce is its’ most valuable asset for its continued health and profitability. Trust strengthens the company, the workforce and its relationship with the customer. Social friction is the result of a culture with low-trust. High trust will minimize this friction and will improve the overall efficiency and effectiveness of systems and processes.
Contractors can see marked improvements in work volume and profitability by investing in the competence and character of the company. Trust resulting from competence and character will lead to the building of a high-trust organization!