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When Best Practices Go Bad

WEDNESDAY, NOVEMBER 19, 2014

By FMI


More items for Good Technical Practice

Many times, companies develop best practices and implement them poorly. This can result in declining morale, losing projects due to bureaucracy, and reducing profit margins.

In some cases, companies spend significant time and energy developing their best-practices playbook, only to have it stagnate after two to three years.

There are typically three major reasons that best practices falter (and even occasionally backfire):

  • Lack of tie-in to the company structure and strategy;
  • Focusing only on process; and
  • Failing to adjust over time.

Let's take a look at these.

No Tie-In

Too often, company leaders cut and paste a "best practice" from a peer contractor or another company and expect it to work for them and their company.

Individuality
©iStock.com / choness

No off-the-shelf book of best practices will fit your company perfectly. Even the best ideas must be tailored to your culture and operations.

But just as no two construction companies are the same, so should each have its own best practices.

Best practices also need to be adapted as a company shifts its strategy.

Managing the chaos of construction means that contractors need the ability to expand geographically or grow their business profitably. Unfortunately, this can lead to the undoing of operational best practices.

Therefore, the standards that led to growth and expansion must be revised and updated continually to remain relevant and valuable.

Process Only

Best practices can be misinterpreted as forms, documents, checklists and binders. The result is that many companies have "standard" operating procedures that are not used as standards.

The most important dimension of best practices is that people follow them.

Best practices achieve their greatest value when they change behavior. Change is difficult and best influenced by leadership. That doesn't mean, however, that the senior leadership team should write the rules and thrust them upon middle managers, although that happens in many companies.

Chalkboard
©iStock.com / aluxum

Don't hand people a top-down set of practices and expect compliance. Buy-in begins with development; leaders must support and facilitate.

A better process, although more time consuming, is to have middle managers and those executing the work develop the practices with the support and guidance of senior leadership. Great leaders also need to reinforce the importance of best practices (and other company values) at every instance possible.

When leaders are engaged, so are their followers.

Best practices can only be called “best” when those who should follow them, do. One difficulty leaders face is sustaining buy-in while holding people accountable.

Good leaders know to expect some resistance to the changes that come with implementing best practice. Rigid enforcement does not work and can be just as ineffective as not holding anyone responsible in the first place.

Alternatively, good leaders must also be able to have tough conversations and provide feedback to those who will not comply. The feedback should include quantified positive results obtained from using the best practices—communicating, for example, improved profit margins, decreased waste, and faster projects.

One and Done

Best practices should not remain stagnant after initial development, but should be adjusted over time.

Anonymity
©iStock.com / lolostock

Best practices are not a one-and-done proposition. Many factors can (and should) influence future adjustments. Leaders need to remain observant and nimble.

They should change when new materials become available, contract terms shift, municipal requirements change, or means and methods become more efficient.

Therefore, “written in stone” best practices are a symptom of companies that do not continuously learn and change over time.

Leading organizations continually adapt best practices to keep pace. Typically, the first development of standard operating procedures (Version 1.0) takes the longest. Version 2.0 is the first true refinement to ensure good fit.

This typically happens after six months to a year of working out bugs. Afterward, adjustments should be made to reflect additional lessons learned across project teams.

Feedback and Fine-Tuning

Because well-executed best practices should result in satisfied customers at an improved (lower) cost, it is important to obtain feedback on project performance.

You want to ensure that best practices deliver value. Therefore, feedback from customers, sub-contractors and vendors can be used to identify methods to improve performance or address misperceptions.

Other fresh ideas will arise naturally as time brings new employees and leaders to the company with fresh ideas. Newer employees use best practices as guidelines to understand how things work.

After some exposure, they are best suited to ask “why” questions and challenge the procedures' effectiveness. This allows for continued improvement.

Developed and executed correctly, best practices can build a sense of ownership across the company, as well as the buy-in to continually communicate and improve execution.

As a result, construction companies can win more projects on bid day while making more profit than their competition.

About the Author

Jim Schug is a principal and engagement manager with FMI Corporation.

JimSchug
FMI Corp.

Author Jim Schug is a principal at FMI.

He can be reached at 813.636.1254 or via email.

ABOUT THE BLOGGER

FMI

“Building Success” is written by professionals at FMI, the world’s largest provider of management consulting, investment banking, and research for the engineering and construction industry. FMI serves contractors, building materials and equipment producers,architects and engineers,owners and developers,and others across the industry. Author information is available at the bottom of each blog entry.

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Tagged categories: Business management; Business matters; FMI

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