Culture Club
How well will your new division president fit in?
Source: BIG BUILDER Magazine
Publication date: 2003-03-13
By Susan Bady. It's not unusual for big builders to hunt for talent on their own turf, particularly when looking for a new division president; there's no substitute for the skill and experience seasoned building professionals can offer. However, along with their experience, transplanted managers invariably bring work habits and preconceived notions from their previous employers that can, and often do, clash with their new corporate colleagues. Add to that the fact that few builders provide the orientation and training needed to help new managers adapt to the company culture and it's easy to see why many veteran builders are having a tough time living up to expectations as they move from one builder to another.
"Unfortunately, the prevalent attitude is 'If you've got a heartbeat and you've produced a 14 percent pre-tax profit, come aboard,'" says Bill Carpitella, president and CEO of the Sharrow Group, a Rochester, N.Y.-based executive search firm. "Most builders assume the individual can produce the desired financial results. They put blinders on and hope there's an assimilation."
What FitsJob skills alone are not an indicator of how well someone will meld culturally. Personality and attitude have a lot to do with it. Builders need to establish identity and culture during interviews, and pre-screen candidates to ensure a good fit. But according to consultant Scott Sedam, this rarely happens: "If you look at what companies in other industries do, home building is in the Dark Ages."
Sedam, a former Pulte vice president who is now president of TrueNorth Development Inc., in Northville, Mich., adds, "I've seen plenty of people who were so full of their own crap they couldn't adapt to the new company. On the other hand, there are plenty who have at least a few ideas under their hat that the hiring builder hasn't thought of. You want to bring [new managers] into the company in a way that doesn't kill evolution."
Management consultant Martin Freedland, president of Organizational Development Associates, in Atlanta, says putting someone in charge of a home building division without training is a high-risk proposition because systems and processes differ from one company to the next. "Maybe they were really good at whatever it was they did before, but they may not be good at it with this particular company," Freedland says. "It's not just a question of whether they made their numbers, but also what they were like to work with."
Along those lines, David Drees, CEO of The Drees Co., in Fort Mitchell, Ky., says new managers fail mainly because of a mismatch between the personalities and the culture. Therefore, Drees gets acquainted with prospects on an informal basis, not just during interviews. "That can mean playing golf or having dinner with them and their spouses," he says. "And we check out their references as much as possible -- preferably people we already know who will give an honest opinion." The company uses behavioral testing to evaluate a candidate's ability to adapt to change.
For Buddy Satterfield, making the transition from a mid-size builder to a large company meant adjusting to a more structured, growth-oriented environment. Satterfield was hired as vice president of sales and marketing for Shea Homes 11 years ago and was named president of the Phoenix division 6 years ago. He previously worked for Estes Homes, which built 250 to 300 homes a year before being acquired by KB Home. Now he runs a Shea division producing about 2,000 homes a year.
Satterfield was empowered to make sweeping changes within the Phoenix division to ramp up production. "We grew very rapidly and it was a pretty crazy pace, whereas Estes was a lot more laid back and capital restrained," he says. "I really hit the ground running. As a matter of fact, I was the designated broker even before I was hired, so I would work all day at Estes and come over here [to Shea] and sign contracts at night."
Shea builds in Arizona, California, Colorado, and Washington state, so implementing company-wide improvements is a challenge. "There are regional and market differences, and the real key is discerning when you can apply common solutions and when you can't," says Satterfield. "There are times when we have to adopt a solution that isn't ideal for us, but that's part of being a larger organization."
Jump StartDavid Weekley, CEO of Houston-based David Weekley Homes, says he doesn't believe a company's values can be taught. Managers must already possess characteristics that make them a strong cultural fit. Through interviews, testing, and reference checking, Weekley determines how well candidates will adapt. Once hired, they undertake a busy schedule of meetings with key players in the company, orientation activities, e-learning classes, and conventional classroom training.
"When we hire someone from the outside, they don't really take on any direct responsibility for the first month or so," Weekley says. "It gives them a real jump start. When they do get on the job, they understand our culture, systems, and processes, and know who they can call for help."
History Maker Homes, in Fort Worth, Texas, takes a similar approach. A team comprised of various department members follows up with promising candidates after the initial interview. "We've trained our team to ask more behavioral and open-ended questions," says president B. Nelson Mitchell Jr.
History Maker builds about 450 homes a year in the Dallas/Fort Worth market. Because of the type of experience required, History Maker has hired construction managers from outside, but says he feels that salespeople who have worked for other new-home builders have too many biases. When screening candidates for sales positions, "We look more for behavior and culture fit and values. We feel we can train them for the technical parts of the job," says Mitchell.
Personality testing will be conducted after the candidate has been through two rounds of interviews. The third and final interview is done by Mitchell. "I focus on the company -- who we are and what we stand for," he says. "I tell them they're going to have fun, but we're going to ask them to work harder than they ever have before. It eliminates a lot of surprises."
Deft DivisionIt wasn't long ago that M.D.C. Holdings was known more for its financial acumen than nurturing employees, but they're working hard to change that perception. "We're going to double in size over the next couple of years, which means we're going to hire a lot of individuals from outside the company," says Mark Duke, chief human relations officer for the Denver-based giant, which closed 8,174 units in 2001.
M.D.C., which builds in multiple markets under the Richmond American name, has a conservative land-buying philosophy that can be a difficult adjustment for managers hired from outside, says Duke. "We only buy land two years out, and use a committee approval process for each purchase that's quite stringent. We have to educate new managers and show them why this philosophy works."
New division presidents must also complete a profile assessment. "We tested all of our current division presidents and took all of their best characteristics to come up with a profile of the perfect individual," he says. No one is expected to have a perfect score, but the test is a good indicator of how well the person will fit in. The executive team must give its unanimous approval before someone is hired. "We ask a lot of questions about communication, interaction, and people skills," says Duke.
With 13 divisions in five states (Ohio, Pennsylvania, Indiana, Michigan, and Kentucky), Wayne Homes doesn't leave anything up to chance when hiring new division presidents. "We assume that people ununderstand how to build houses, but that's all we assume, because our systems are so different," says Bill Post, COO for the Uniontown, Ohio-based company, now owned by Centex. Wayne is an on-your-lot builder and owns no land, so homeowners are responsible for all site improvements including landscaping, sewer, and water.
"That means the division president deals with the customer almost like a contractor, which is unique," says Post. "Many times, in bigger builder operations, the division president is isolated from direct customer contact, but ours aren't, so we look for people who have good human relations skills." Division presidents also must be comfortable working in a highly structured environment, "because we do measurement and feedback for continuous improvement." What surprises new division presidents the most, he says, is Wayne's participative management. "A lot of companies talk about partnership between senior management and division heads, but we really live it."
Freedland cautions builders not to underestimate the value of a formal program to bring new managers on board, whether it's classroom training, a manual, a CD-ROM, or mentoring. Even though people hired for senior positions are assumed to be experts, "In reality, they're like a brand-new step-parent with a whole bunch of kids who are used to doing things a certain way," he says. "The ability of that new person to turn his or her ego down, figure out what's made the company successful, and how to get acclimated to it is really important."
