What's the key to making money in production home building? Ask that question of housing industry pros and responses are likely to center on a single theme: get the right people. If that's your game plan, today's a great day to start.
Thanks to the way large home builders are slashing their workforce, there's probably never been a time when so many talented managers are looking for jobs, from construction superintendents to division presidents.
Keep in mind residential building companies don't really build anything. They manage people and processes that take a piece of land under ownership, coax it through entitlements, then design, sell and build a finished neighborhood. All of the actual construction work is done by trade contractors. So the critical people to find are those gifted managers who nurture creativity and efficiency in employees and a host of others within the production process who work for government agencies, design firms, subcontractors and suppliers.
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What's It Take to Be a Great People Manager?
But before you start calling headhunters to find them, give some thought as to what it takes to be a housing industry manager who is great with people.
In the red-hot housing markets of the early years of this decade, many builders lost sight of how important people management skills are. Leading a sales team or a construction operation lost ground to less collegial pursuits like financial management and land acquisition.
Those days are over. Especially across the formerly sizzling Sun Belt, builders' land specialists are now trying to get rid of it, not acquire it. And unfortunately, many production builders are getting rid of people as well.
Big Builders Shrink Their Workforce
The big public builders are slashing their workforce and cutting overhead to satisfy Wall Street, unleashing a torrent of talented people onto the job market, including good managers. Left behind after the layoff bloodbaths are companies reeling from shattered corporate cultures. Headhunters call the layoff victims "active" job seekers. Those who still have jobs but are disgruntled and fearful enough to start circulating resumes they call "passive" seekers. One search industry insider told us, "There isn't a single employee of a public home builder who can't be recruited today."
Plenty of builders are doing just that, even those that are still letting people go. "The public builders are doing a slash-and-burn because of Wall Street's reaction to their declining quarterly earnings," says Fort Lauderdale, Fla.-based headhunter John Ropes. "Cutting payroll is the fastest way to make a deep dent in overhead. But they know they'll need great people managers to rebuild their teams and culture when the market comes back, so they're still looking.
"But it will take those companies a long time to recover the capability to capitalize on a hot market," Ropes says. "The big private builders — especially those with strong cultures like Shea, Drees and Weekley — are in better shape. They're maintaining their overheads as an investment in future earnings."
In fact, Houston-based giant David Weekley Homes is picking up managers and continuing to invest in training. "Our corporate culture helps us more in bad times than good," says Chairman David Weekley. "It's amazing how the people management side seems to go out the window when companies are under stress. But it's part of our core culture to maintain a good place to work. That adds to our ability to weather these things. We don't fire senior managers, no matter the condition of the market. When you do that, the effectiveness of their teams goes out the window.
"Our corporate culture helps us more in bad times than good." —David Weekley, chairman, David Weekley Homes
"When employees get worried about their jobs, it affects their relationships with customers and trades. So people are the last cut we make. We've had a 7 percent reduction in our workforce. If Texas goes bad, it will be a bigger test for us. Right now, we've been able to transfer a lot of people out of Florida to Texas, Atlanta and South Carolina. For those we couldn't transfer, first we doubled their severance package, then we tripled it."
Weekley trains his managers in a corporate culture of caring. "This is an industry that's dominated by tough, top-down, belligerent management styles," he says. "If you help people learn to manage people with respect, they take to it easily. Most people don't want to be jerks. But this isn't a lax place to work. We still hold people accountable, just not for market conditions out of their control."
Weekley believes his project manager form of organization helps develop people management skills. "A project manager has full P&L (profit and loss) responsibility for a number of communities in a small geographic area. Sales, construction and warranty people all report to the PM. So everybody works as a team. There's no finger-pointing or buck-passing," he says. "We have regular quarterly meetings where each manager's metrics go up on a screen, ranked. You don't want to be at the bottom of that list. This is not a place where uncompetitive people go to draw a paycheck."
Still, Weekley is recruiting. "This is a great time for us," he says. "People see their friends beat up or run off from other builders. We're getting the people they're trying to keep. Then we invest heavily in training and mentoring our managers, so we don't lose many."
Leadership: Necessary or Not?
In our search for the attributes of great people managers, an interesting debate emerges among human resources and management recruitment professionals when we ask whether or not an effective people manager must also have leadership skills.
"To be really good with people, you need to be an effective leader," says Ropes. "Directive managers can make their numbers, but they're not good people managers because they're not developing the talent underneath them. Great managers overcome the urge to take over and do things themselves. They know they have to lead, not do. They sublimate their own egos and measure themselves by what the team accomplishes."
Leo Taylor, former Pulte executive vice president of human resources, now CEO of TopBuilderJobs.com, says hiring the right people is the most important skill of an effective people manager. "If you get the best people, you make your own job easy," he says. But he comes down on the side of those who think leadership is important, if not critical. "Too many managers want to play cop," he says. "They want to control everything. A cop will put in an elaborate set of policies and procedures that forces employees to clear everything with the boss. That's classic command and control. Your people are only facilitators. To grow people and allow yourself to move up, you need to be a catalyst, giving junior managers the authority and responsibility to make decisions on their own. That's why mentoring is important."
"Leadership is not absolutely necessary, but it sure doesn't hurt," says Larry Phillips, now retired from the top slot in human resources for Citigroup (and before that Jack Welch's vice president of human resources for GE's aerospace business). "Communication skills are probably the most important attribute of a good manager. Effective managers keep lines of communication open all the time and put what their teams need to accomplish in a big-picture context. When people see that dimension, they often generate innovations that improve the organization.
"If you get the best people, you make your own job easy." —Leo Taylor, CEO TopBuilderJobs.com
"The hiring role is next. Getting the right person into each job starts with understanding the position and the skills needed to perform that job at a high level," Phillips says. "Then you need to understand how well the candidate is likely to mesh with others on the team. The ideal is to get as much of the hiring/firing/training/mentoring role as possible into the hands of line managers who know the most about the job, the skill set it demands and the dynamics of their teams. But it's tough. Many managers don't want it. They try to push it off onto HR specialists."
People management consultant Martin Freedland, chairman of Atlanta-based The Berke Group, agrees with Phillips that leadership and management are different. "Management is about controlling the people below you," he says. "Leadership is about facilitating their growth. There's more command and control in management, but the best managers can do both. You don't want people to just free-wheel it; you have to get results. Managers do things right, while leaders do the right things. Leaders are about team building, but they also allow people to take risks.
"As we run into more problems in the industry, companies are becoming more over-managed, and leadership is going away," Freedland complains.
Redmond, Wash.-based consultant Bill Allen says leadership is more effective than management alone. "Managers who compel events to conform to plan are not as successful as those who lead with empathy and affection for their people," he says. "That's not to say that leaders don't hold people accountable and kick butt occasionally. But when they raise their voices, it's for a reason — and the effect is calculated. Patton was a screamer. Lombardi was a yeller. But they weren't just venting."
Allen points out that Chicago Cubs manager Lou Pinella is famous for his tantrums aimed at umpires. "But they are staged for effect," he says. "Over the long haul, you get more out of people who have real affection for a leader. People rarely have much affection for a controlling manager."
Most Wanted: Sales Managers
The management professionals in most demand are also the ones being shown the door with greatest regularity. Builders everywhere want a manager who can light a fire under the sales force. They don't mind bouncing the current occupant of that office because most companies are way behind on sales.
Atlanta-based consultant and Professional Builder columnist John Rymer says the best sales managers are definitely leaders, not controlling managers. "They have enthusiasm and love for the business," he says, "and that kind of passion is contagious. They see themselves as support staff, and their role is to make their people more successful."
However, Rymer is highly critical of most practitioners of the trade. "It's rare to find a sales manager today actually holding sales people accountable to measurable performance standards," he says. "Sales people are notorious for testing how far they can push a manager and get away with it. If you let that happen, you've lost your authority with them as a leader."
Rymer says signed sales contracts are not the right metric for measuring a sales team. From 2002 to 2005, if you were using contracts as your measure of performance, you didn't have to manage at all, he says. "Everyone was making budget," he asserts. "Today, nobody's making budget. In either case, you need to measure what the sales people are doing to improve their chances — like follow-up phone calls and e-mails, Realtor presentations, working existing customers for referrals and role-playing to improve presentation skills."
Boca Raton, Fla.-based sales trainer Bob Schultz has a long list of attributes for sales managers, but experience isn't one of them. "Not unless that experience includes managing through the 1991–92 housing crash," he says. "Most candidates you look at today only have experience in the overheated markets of the last decade. None of that is relevant today."
Schultz believes more than 50 percent of sales managers active in new-home selling today have no battle scars from previous downturns.
What he looks for: "Smart, someone who can think on his or her feet. High-energy, with a passion for the business. Integrity. Accountability up and down the organization. Most sales managers do not hold people accountable for learning scripts to overcome objections or for role-playing to improve their presentation skills."
Managers in other industries have much better experience, Schultz claims. "Restaurant managers have to get people making minimum wage to show up on time every day and do a good job of pleasing customers. And they make half as much money as most sales managers in housing," he says. "We haven't demanded excellence for the last 10 years because we haven't had to. Sales happened anyway."
"[In home building] we haven't demanded excellence for the last 10 years because we haven't had to. Sales happened anyway." —Bob Schultz
Houston-based consultant Tom Richey says sales managers must have leadership ability. "They have to inspire and motivate people to achieve more than they would on their own," he says. "There's a synergy of consultancy, captaincy and creativity that's necessary to get a team working toward a common goal. That leader needs to have high morals and integrity. Any sales team led by a low-integrity leader will deteriorate quickly. The sales manager should be a leader who is admired as well as followed," Richey says.
He adds that a manager should be a self-starter, claiming only three percent of American workers are capable of working in an unstructured, unsupervised environment. "That's exactly what we expect sales people to do in their model homes, so the sales manager better be a shining example of a self-starter."
Richey believes the sales manager has to be the ultimate team player because he has to act as a "conduit" between the company at large and the salespeople in the communities. "The manager has to keep those sales people from being isolated," he says. "That sales manager has to sell his team on the vision, values and goals of the organization every day."
Design Perspectives: How Do Architects Find Managers?
We interviewed a number of architects to see how they find and promote managers in their highly-collaborative and creative design firms. While they seem to have much in common with builders when it comes to identifying, training and mentoring managers to relate to people individually and in teams, we did find a few areas in which architects seem to deal with even more intense issues.
"The uniqueness of architecture is that it's very creative and also extremely collaborative," says Aram Bassenian, principal of Newport Beach, Calif.-based Bassenian/Lagoni Architects. "We have to balance recognizing individuals for their creativity with team building that enhances the firm."
Bassenian says he looks for people with a problem-solving, positive attitude. "We have to approach problems consistently," he says, "with the understanding that there's always more than one possible solution. That's what we do — solve problems — so our managers have to sublimate their personal egos to adopt a 'team ego.' They make the organization the star. They have egos, but they keep them in a hip pocket. Our managers need especially acute listening skills. Collaborations involve not only our own employees, but those of our clients as well. It's not one person's dream that makes great residential designs happen."
He says his managers must have the ability to keep their heads when others are losing theirs. "There's always turmoil," he says with a smile.
Paul Twitty, principal of West Palm Beach, Fla.-based Swab, Twitty and Hanser Architectural Group, says tolerance is an important attribute of design team managers in his firm. "We have to be tolerant of the diverse personalities we have to deal with, especially clients, in large project development teams. We train people in client relations, so listening skills are very important.
"We want managers who are forceful, yet tactful," Twitty says, noting that few architects have a gift for business. "We look for creativity and design talent when we recruit young architects to the firm," he says, "but we look for business acumen when we promote people to management. Our project managers have to be able to lead teams. People are more creative in a collegial atmosphere rather than a dictatorial one."
What Builders Say
Great people managers with long-standing reputations can offer great insight. For example, former Professional Builder Builder of the Year Nash Phillips, 86, now retired from Austin, Texas-based Wilshire Homes (which he founded on the comeback trail from the bankruptcy of his landmark Nash Phillips/Copus firm) says he always looked for managers who really wanted to be part of a team.
"If you're sold on yourself, you ought to stay by yourself," Phillips says. "We needed team players who knew how to cooperate with others, but not everybody is built that way. If you don't enjoy people, you won't be any good as a part of a team."
Stewart Cline retired several years ago as CEO of (then) Atlanta-based Giant Morrison Homes. He's now building semi-custom homes in Charleston, S.C., with his two sons under the name Cline Homes. He says a gung-ho, take-the-hill attitude needs to be balanced with empathy and listening skills.
"I had to work at being a better listener," Cline says now, "and not be so controlling. It's interesting to watch Weekley because his company has always been focused on creating a superior workplace. When the public builders were kicking everybody's butts, Weekley was in tough markets, but now the shoe is on the other foot."
Paul Leonard, who cut his teeth with former Professional Builder Builder of the Year John Crosland in Charlotte, N.C., carried an enviable reputation as a people person when he took over as interim CEO of Habitat for Humanity a few years ago, after the board of directors ousted Habitat founder Millard Fuller. He says he has always looked for managers with a genuine interest in people.
"In my experience, it's not something that you can fake," he says today. "If you're so focused on the bottom line that all you can think about is analytical stuff, it'll catch up with you."
When Leonard took over Habitat in Americus, Ga., he had a goal to sit down with every employee in their own workspace. "In six weeks, I visited 350 out of 400," he now says. "That made a huge difference as we dealt with a very conflicted situation."
Craig Perry, CEO of Coral Springs, Fla.-based Centerline Homes, is dealing with one of the worst markets in the country, yet he managed to close 535 houses in 2006 for $191.3 million in revenue. That took Centerline to No. 148 in the Giant 400 rankings. This year, he says he'll close 575. Not many builders in South Florida can say that. Perry says his reputation as a great people manager is founded on trust.
"You have to do what you say you're going to do," he says now. "We're finding out lately, in a bad market, that there aren't all that many trustworthy people in this industry. Crises will expose that."
Mark Hodges, formerly Ara Hovnanian's right hand at Red Bank, N.J.-based giant Hovnanian Enterprises, recently took over as president of Hovnanian's Southeast Florida division in Palm Beach County, which is now down to 65 employees from a peak of 130 two years ago. He believes leadership is a vital component of managing people.
"You're not going to be great at management without being a leader," he says. "If people don't admire and have confidence in you as a leader, the directions you give them will come across as hollow. Leaders energize and motivate people as well as manage their performance.
"If you aren't interested in and compassionate toward the people on your team, you manage them. But if you care about them deeply as people and want them to be successful, you lead them."
Hodges followed Paul Leonard's lead without ever having heard his story. He recently met with each of the 65 people in his division — one-on-one — to learn about their families and their hopes for the future. He's walking the talk.