We are struggling to turn a profit, in spite of the fact that our sales are up 60% over last year. It's not a mystery, we are inefficient. Work in the shop is somewhat chaotic. Our product is good, and we deliver on time, but in the middle is a lot of wasted time and material.
I have two smart, green cabinetmakers. With the CNC, we don't need high levels of experience, I believe all these guys need is better information about how to do their job. I have worked in shops that were efficient without fancy machinery, because everybody knew "this is how we do that" and "after you do this, you do that".
I can figure out what our processes need to be. How do I implement them and get my employees to follow along? I've read the E-Myth, and I can make checklists, but I'm pretty sure they will just be ignored.
You answered your own question, the checklist is good but I think you need someone actually managing. Look at the fast food restaurants they have the system dialed but still have a manager. Just look at one that has a manager and one that does not and you will see what I mean.
Also if you want to manage it you have to measure it.
In keeping with the managing things you should set targets on what you want done in what time frame.
If the guys are newbies you have to train them.
Look at Lean manufacturing, go to Paul Akers site he is the guru of Lean.
What specifically do you make? My profitability varies wildly depending on what I'm making. My shop rate is close to $125/hr for the technical furniture I make, while it's more like $50/hr for residential cabinetry. And if I tracked residential installation as a separate item, I might just have a negative number.
The point is that you have to track specific types of jobs or tasks in order to know where you make and lose money.
You may also want to question whether having 2 green cabinet makers makes sense. I thought naively that I could bring in smart green guys and train them the right way in a matter of months. I was wrong with all 3 guys I tried that with. I find it better to find someone with at least 3-4 years of experience who knows all the basics.
The green guys are graduates of the local community college's woodworking program. One is a sure keeper, he has already started taking over my CAD and CNC work. The other has the right hands-on skills, but has some minor attitude issues.
I thought about bringing back an experienced guy that I'd had to lay off last spring. But, we can't afford him at the moment, and he has his own hangups about the way the work should be done.
I've tried adding job costing data on the timesheets, but they get busy and forget. I would love to have a foreman in the shop to regulate the activity, we just don't have the cash right now.
What I'm getting at is I don't feel like these guys take me seriously sometimes. I have learned to be direct with my requests and criticism, but a lot of the time it's business as usual as soon as I turn my back.
Generally speaking this requires a full time presence otherwise you are de facto forcing them to create their own policy. Policy has to be made known and repeated often, otherwise you are going to end up with what you are experiencing. Secondly you have to be prepared to enforce that policy. Included in the policy you HAVE to include what the penalties will be for such violations. Otherwise there will be a lack of certainty of the validity or what the real policy is. This should all be in writing. IOW your shop culture has to be created every day. I do not mean to imply that an iron fist will work either cause it sure as hell will not.
The other thing is that any business has to have a minimum of 2 people one who is driving work out the door and one who is driving work in the door. If one person is doing both it is sort of like driving down the frwy and throwing the transmission into reverse.
2) Do you understand how greater efficiency will help your business?
3) Can you explain that to your employees?
4) If you have, why don't they see a connection between how they do their job and the success of the company? Does their life improve if the business does better?
5) If they get all of that, and still ignore you, then fire one of them and see how the other reacts.
6) If that person still ignores you, fire him too. Then look for better employees.
7) If you feel that this advice is too harsh, then look in the mirror and figure out why they ignore you. Then start acting differently.
Effective management is they way you act all of the time, not just something you do now and then. It requires constant communication, with regular repetition of important points that you want to make. Without knowing more about your operation, it's hard to provide better advice. Have you got anything more to tell us?
As Pat said full time supervision is what it is going to take. Just walking in, giving some instructions and then leaving is a bad way to guide a business towards success. You can already see the results of doing that.
So spend more time in the shop (I know this can be really difficult as you have your own tasks to accomplish) and begin to chip away at the problem starting with the small issues.
First though you need to have a serious meeting with your guys. Let them know this is not working and if it doesn't change you won't be able to stay in business. When that happens they will lose their jobs. You have to somehow make them realize that either the business is successful or it is going to have to close. Think long and hard about how you are going to present this point. It will be the basis upon which you will build the new structure. Have this discussion in a space other than the main shop area. It needs to have the impact of a board meeting........not a 5 minute break talk. If it is nothing more than a chat during a coffee break it won't have the needed impact. You have to make them take this to heart.
Then decide what you need to change first and hang around the shop a lot to help implement the change.
Years ago when both my employees were new to curved mouldings I set a policy where they got a small bonus for every mistake they could find on the layout forms. I'm not immune to errors and I made enough to keep them interested in looking for them. This was a good policy because it showed I wasn't too arrogant to admit to an error and also gave then a little bonus money. Most importantly though it made studying the layout sheets prior to starting a project a part of the process. You too need to find some way to make efficiency become part of the process. Posting your question here is a great start.
You are getting advice from successful people here, and if you re-read it, the same points are being made more than once.
I'll add a few:
Why do you settle for less with employees? You must make it a top priority to have the best employees. You cannot afford to settle for mediocre or less. If you do, you will never have a successful business, only a job that is no more than a job.
I started keeping track of my time to make things in 1971. Just some notes at first, until I started to see some value in them and standardized it, but kept it simple. This was for whole jobs, start to finish. As I progressed from shop to shop, I learned I could look at a job, or parts of it, and accurately predict how long it would take to make it. As my desire and need to predict became more important - I was managing and pricing by now - I became better and kept better records. Today, I have a 1" thick file that has notes for hundreds of projects, and it is not unusual for me to predict within 1-2% on jobs that total 5 to 500 hours. I can also do this quickly and easily, I might add. It is one thing that has made my shop profitable and also made me a desirable employee (should I ever choose), despite my advanced age.
Lots of good advice here. One thing to add though is that it isn't usually the employee that is bad it is usually the management that is bad. People want to do a good job. Lots of times they just don't know what that means, what is expected of them, how to get it done.
You need to meld these people into a team and one that is focused on group success. You will improve results if they know what success looks like and what their role in it is.
The good news is, I think these guys are capable of doing great work. Training is going to be an ongoing process.
I held a company meeting a while back in which I attempted to communicate the business' challenges and what needed to happen for our success. This clearly needs to be a weekly event. Looks like I also need to spend more time in the shop.
During the above meeting, Greenhorn #2 was yawning. The solution there is clear to me, I need to have a one-on-one discussion regarding the attitude issue. If it doesn't improve I have no problem signing his final check. Good help is surprisingly hard to find here in the Bay.
Part of my problem is that I get focused on my own task (usually sales/estimating, project layout, CAD/CAM stuff) and forget all about what is happening in the shop. I would really like to put sales as my #1 priority. Which means I need a "drive the work out" guy. That's not in the budget right now.
Another theme I'm getting here is that I need to define everyone's roles.
Paul, what sort of information about us would help you understand the business better?
"Which means I need a "drive the work out" guy. That's not in the budget right now. "
How much is it costing you not having such an individual?
Remember if you want to manage it you have measure it. IOW like Kilgore said, I too have records of job hours going back decades. Setting targets for what is expected to be done that day would be appropriate. I remember one of my workers telling me about a shop he worked at where the owner was always out selling and bidding and asked the workers what he could do to get the jobs done faster. Of course they would screw around all day while he was gone and the jobs were not solvent and he went BK.
A pilot has gauges to tell his how the airplane is doing. In a business your gauges are the numbers. How many hours on the job, break even point, percentage of labor in a job, overhead cost, and of course profit and loss. You need to look at these numbers every week, monthly is like driving down the road using a rear view mirror.
If you had a foreman how many hours would that save?
You have to look at this on a unit cost not on an hourly cost. IOW how many Chinese workers would it take to build a Boeing 747? on an hourly basis the Chinese are cheap, but they can't do the job, so on a unit basis the cost would be astronomical. There is a reason why most of the new hires in the past few years have been workers in their 50s (attitudunal problems and all).
That being said I hear you, that it may not be in the budget, but a weekly meeting is not going to get it done.
You mentioned organization and defining roles. Yes good idea although it gets a little silly when your name is planted on most of the functions, but a good process to if nothing else make you aware of how many hats you are wearing. But also to make the worker aware of what his job is.
Organization is really an accumulation of policy. Policy like we screen the customers and don't do work for people who are troublesome or we do not start on a job until the last job is done or we always file a prelim on jobs, Joe runs the cnc and Dave does the installs, etc.
From a marketing point you will want to define your niche so that there is enough repetition so that you can more easily train people.
BTW I have often found yawning can be an indicator that someone does not understand what is being said. E.G. I might tell a worker to work on cutting the haunches for the doors. He might then walk away sort of confused, I then ask him do you know what a haunch is and he will say no. Once explained he takes off with certainty. This is not to say what you are thinking is not happening as it certainly does. My point though is that terminology can be a factor for newbees. A list of terms is not a bad idea not that there are a lot of them in cabinetmaking but still they can hang people up. This may sound academic but a painter I know took 30 minutes to paint a french door (he was experienced) he then looked up all of the word associated with a door (jamb, mullion, stile, rail, header, casing, etc) he was then able to paint a french door in 15 minutes. True story, certainty is everything when doing a job.
Look in the mirror for the source of your problems. Not bashing, but you have to make decisions regarding your company, implement policy, and enforce it.
By and large people (employees) do juuusst enough to avoid being fired.
Seriously, how much of your time is realistically wasted every day?
I make a updated list every afternoon/evening on what we need to accomplish the next day/this week/next week.
Spend 30.00 on a white board and nail it up in a common area where everyone congregates in the mornings-usually right above the coffee pot or next to the bathroom(also allows you to monitor the traffic in those areas at the same time).
As for the guy with the attitude, put him in check immediately, preferably on the shop floor and leave no doubt that you're running things there, wether he's there or not-he's dragging the team down.
FIRST thing EVERY morning, call everyone together for a "team engagement" meeting to discuss current projects, priority projects, and future projects and set deadlines/goals for their completion.
Is the material available? Hardware on hand? Special tools needed? Are we in agreement on time frame allotted?
If no to any of the above, your not doing your job and need to bump it in gear and make a list of material/hardware/tooling needed and get it coming. You can order that while their pouring their coffee/getting their bathroom stuff out of the way, ect and getting to their work area.
Shortly, your off the phone and ready to begin directing/facilitating/inspecting and gauging the days progress to help them accomplish their goals for the day (they may be on track or need to step it up).
Just prior to quitting time we all need to meet back at the whiteboard and review our progress and address any shortcomings and identify the cause. Remember everyone was in agreement that morning, so lets address where things got off track at that time, to improve and also get tomorrow's goals on everyones mind.
After your guys go home, spend 30 minutes inspecting (you will find f'ups so put them on the board to be addressed in the a.m. and start building the "task" list on the whiteboard for the following morning.
Break the job into "task" to be marked off at completion, ie cases/hardware/doors and fronts/drawer boxes/finish/loading/truck cab and box clean?/mouldings and hardware loaded with job? There is something in front of them at all times-just check the whiteboard. You get the idea.
They need to understand your running a for profit business, not a coffeeshop to hangout in 8hrs a day. Run it like one.
BTW I am available for consultation by appointment...lol
Basic numbers help define any business. Gross sales/number of employees is usually illuminating. Almost anything will work as long as you can collect good data in a consistent manner. Back when I started, before computers, and before I'd even heard of a spreadsheet, I used to divide my selling price by the number of shop hours used to build the piece. Which is an arbitrary measurement of efficiency, but at least it's easy to calculate. Once I started keeping that record, the next step was to tell the guys how they did on every job. Then we worked on improving it. Obviously, with that measure, there are two ways to get better results: raise prices or work more efficiently.
That's a gross measure, though. In order to tell you what's wrong, I'd really need to visit your shop, and see how you communicate with your employees, take a look at your records, and get a general impression of how organized and capable you are. I can't actually do that, so you need to ask those questions of yourself. What information are you collecting? Do you do it regularly, and consistently? Do you share the results with anyone? How good are you at explaining abstract concepts to people? The primary role of the boss of a company is to observe what's going on, preferably with numbers, digest the situation, and then consistently convey that information back to the workers, with additional guidance to make sure that everyone understands how the business succeeds. It's quite difficult to do this if you are also in an operational role - in your case, making sales and doing all the other design work. I've been there, and it's tough to get out of. You are currently caught in a death spiral: you need cash to hire good people to help you get to the next level, but your current state of operations is sucking up all of your money.
There's no easy way out of this, unless you can efficiently do more work each day until you get ahead. Your next best bet is to raise prices. If you have more work than you can do, start there. Another thing: get help. You've made a good first step by asking your question on this forum. Even better will be to find a mentor in your area who you can meet with on a regular basis. That person will have a much better sense of you and what's happening as you grow.
Sorry I forgot to address your "drive the work out guy" comment.
In a small operation like you and I have (2-10 guys) that guy is no one else but YOU.
Frankly I can fall asleep managing 2 guys if were meeting twice a day, and I do ALL sales, client meetings, drawings and CNC operations.
If you'll follow the advise above consistently (takes 10-15 min EVERY morning EVERY afternoon if you've updated the lists the evening prior),
shortly you will be able to let one them be the lead the meeting (of course you'll still need to be there, so you can input on your areas of contribution-sales projection, material/hardware status, expected delivery dates, ect)
This is a great discussion and a huge amount of good advice has been presented.
I would now suggest you reread the entire thread two or three times. Make notes as you pull out the major points that you feel you can apply to your situation. Then organize these points on paper into a solid plan.
As BH and others have pointed out, this is a great thread. It certainly has provided a lot of data points to consider when developing strategy. I would like to add some observations of my own (in no particular order).
There is a lost generation of younger workers in our industry. For 4 or 5 years we weren't creating many new ones. For this reason there is a deficit of people that have enough experience to successfully work independently and still have the physical stamina (and eyesight ) to get the job done. You can still find a fair number of guys with a lot of "years" in the trade but most of them earned their chops when money was free and customers were drunk. It was easy to be successful during the dot com days and just as easy to misinterpret success as brilliance.
Pat & others are correct that when you try to be in charge of production AND in charge of sales (& design & engineering et.al) something has to suffer. More likely everything suffers.
Hiring a production manager is no panacea either. A lot of times this is no different than the westerns you would see on TV where the town's civic leaders pin a badge on the new sheriff and tell him to go get the bad guys.
A guy with enough experience to be worthwhile is going to cost Evan at least $250 - $300 per day. That doesn't sound like much until you realize each of his two guys has to kick up $125 - $150 EVERY day just to pay for the clipboard holder. (Think Sopranos)
What you have to do in this case is redesign the production manager's job.
Rather than having him merely pass out tasks and monitor completion you want this guy to be in charge of improving how you do production.
Another good source of information is a blog on the New York Times called "Your the Boss". Our very own Paul Downs wrote a lot of articles for this blog. We would all become a lot smarter to read what he wrote and more importantly read the comments about his articles.
In particular you want to find the chapters where he describes a young man who took it upon himself to implement Lean initiatives for his company.
(As an aside I would hope this blog would get published in a way that you can research it without having an electronic subscription to the NYTimes. Don't get me wrong, I think this is money well spent. The real (opportunity) cost has to do with the rabbit hole. I already have enough distractions in my day and reading the NYTimes is far more interesting than my business).
I have more thoughts but my coffee is getting cold and this is the time of day I spend learning new things so I will jump back in later.
PS: Evan you need to work on your website. The picture on your homepage shows very impressive and technically challenging work. A blue piece of art is, however, not so relevant to most of your customers and the home page is the hook.
@Cabmaker: I regret to inform you that the Times, in its infinite wisdom, has terminated "You're The Boss" as of last week. The good news is that everything I ever wrote will be up on their website for the foreseeable future. I wrote 174 posts in the last 4 years, and you can read them all, and all of the comments, by clicking on the link below. The archive is arranged with most recent posts visible first - you have to continuously scroll down to get back to the first ones, published in 2010. One of these days I might get around to a "Best of" compilation.
I can understand why you prefer this be an ideological response on the part of the New York Times but I would guess it would be more accurate to conclude this has something to do with budgetary constraints.
All kinds of media are struggling these days and there has to be offsetting revenue for every expense. I learned that from the Wall Street Journal.
I will touch on this, the next 30 years are not going to be like the last 30 years. Consider the change of the last 30. I know most us don't care too much about the next 30 years cause we are too old to.
If you think looking through the magnifying glass will get it done you are mistaken, I would recommend looking through the binoculars. Which is more about economics than politics, not that two don't converge at times.
Thanks again all, I have read, reread, and re-reread this thread, and will probably do so a few more times. I have talked to a lot of other business owners and none of them seem to "get" what I'm going through. It's also amazing how hard it is to see what's going on right in front of my own nose, but your comments have illuminated the situation.
I have started by putting together a presentation for my employees that will help them understand what we're trying to do and what is going to change, starting with "everyone is expected to be here at 8am sharp for our morning meeting" (I have been probably too flexible on starting time). Barring any poorly timed naps, I think it will be a good start to getting us all in the same line. I really like Jim's twice-daily meetings, so that will be part of the follow through. I've done this informally as the guys come and go, but it really needs to be solidified as part of our routine.
The rest is going to be partly info-gathering and a lot of hands-on management in the shop on my part. The work is still flooding in, so at the point when we have the cash flow we will hire a production manager/optimizer as cabmaker said.
Off topic: Paul will find a new outlet for his column, and we will follow. At this point he could self publish as a blog, we don't need the NYT to tell us how valuable his shared experience is.
It's been a long while since I ran a 3 man operation, but if I had followed Jim's advice it would have gone much better than it did. I think that his suggestion is the one you should focus on, and then add in some of the other ideas once you get your situation stabilized. Unsurprisingly, if you think about it, running a business is a lot like building cabinets: there are methods that work, and you need to do those things on a regular basis in order to succeed. Unfortunately, the things that are best for a very small shop don't work as you get bigger, so you need to evolve as you grow. But the first thing to do is get some control over your situation. Jim's 2-a-day meetings will be a big help.
As for me starting an independent blog: maybe. It was a significant effort to do all that writing over the years, and I'm enjoying a little break. I also wrote a book last year, which is being edited right now, and should come out some time later this year. If that goes well, I might take up blogging again. In the meanwhile, I'll be monitoring this forum and chiming in when I feel I have something to say.
Concerning your comment about trying to get everyone to show up on time:
I have been in business for 13 years, have 18 employees and have always has this as a policy:
“You can take lunch anytime. If you take 20 minutes or less then you will be paid for your time during lunch. If you take more than 20 minutes lunch is not paid. To get paid for your 20 minute lunch you need to work a full day.”
We have a time clock system and they punch out/in for lunch. We start at 8:00 and by 4:01 this place is a ghost town. The guys that show up at 8:00 and take a 20 minute lunch get 8 hours of pay. The guys that show up at 8:30 and take a 20 minute lunch get 7 hours of pay. It doesn’t take long for those 8:30’s to start showing up at 8:00.
if you don't have budget for a foreman now, fire one of your employees. Let them know that you are restructuring and only one of them will remain here after 30 days.
That may encourage at least one of them to kick it up a notch. Use the paycheck saving from firing one of workers towards hiring a foreman. If foreman could keep the single employee steady producing all day every day, it would probably be more profitable than it is now with two workers goofing off a lot.
With improved production and dependable timelines, you may soon be able to hire back another worker, this time of higher quality.
The E-Myth and Work the system are great books. I would point out that they are really talking about putting your policy down in writing. It is not possible to overstate the importance of getting your policy written down and made known.
The E-Myth is specifically talking about organization. Again it would benefit you to list out the functions that are performed and by who on a graph. E.G. Sales, Bookeeping, Production, QC, Planning.
Work the System in a nutshell is about writing down procedures/hats so that you can predictably get the results from the workers that you are aiming for. Sam the author talks about having an epiphany, when faced with not being able to make payroll he realizes that his business his all about systems. And how he was able to reduce his work week from 100 hrs (as a single dad, living in his office) to 2 hr a week. How is that possible? by getting others to predictably follow your policy/procedures.
Paul Akers does the above with video. Video is more instructive. He also does this with the Lean angle, which is really terrific for keeping people engaged and contributing to your business.
BTW Sam and Paul are friends.
Another thing Paul talks about is something I also found to be very important, that is who you higher. You want to hire enthusiastic people, shy away from hiring apathetic or angry people. This is the most successful thing I have ever done. The best ones moved on to run companies or start their own very successfully. Not possible to overstate this importance of this.
But the most important thing to do is find a niche, this is done by surveying. Some people will disagree with this. Paul Akers says the most important thing is Lean, but he is wrong. The most important thing is to survey to find a niche. I went on his podcast to debate this with him. The reality is that the basis for his success was the Fastcap he in effect found this niche by solving a problem he was having, This was a survey of what problem was he having and the solution to it. I brought this same point up to Sam he said you are right and "I will have to start harping on this more". As in reality Sam found a niche as well, which was to be a 911 service for doctors and other professionals. Think about it how many answering services are successful in this age of smart phone and the internet? IMO this was as important as writing down the procedures, to Sam's success.
My advise is to find out what is causing your current boom and reinforce what ever that thing is. This might be advertising, changing the way you do your work, spending more time on sales, doing work in a certain area or a certain demographic. In my case we started doing photo booths (the kind you put a dollar in and get a strip of photos back), so I said why are we making more money?, at first I thought it was because of higher volume and the repetition, but then had the epiphany that people think of buying woodwork for a retail operation as an investment, not just a consumption as with residential work. Paul Downs talks about the change he made in advertising on the internet and doing smaller less complicated conference tables (same reason with his customers by the way). Then clamp down on the finance in other words do not buy equipment or move into a bigger building and pay every bill you can.
AFTER you have paid every bill take the rest if any and invest in what ever strengthens what ever caused the current boom.
Lots of good information here so I'll only add two things:
1) Compensating for a lack of organization with more man power is an expensive, losing propisition.
2) Employees by and large are who they are. You can have have training, guidelines, discipline and follow thru but at best you are playing around at the margins. A guy either has the smarts, ambition and integrity to do the job or he doesn't. Don't waste your time once you realize he doen't. All the pep talks, training and follow thru in the world won't make up for what is Dad & Mom (or the school of hard knocks) did not teach him.
I think you are right about the pep talks. Pep talks don't accomplish much.
This is largely because the target we shoot for is so far off the market. It's like carpet bombing when what we need is an accurate drone.
People are not stupid. The reason you have to constantly explain how commerce works is not because the concept is a difficult one but more that the apparent confusion is really code for "what's in it for me?" Try watching guys who can't seem to get the logic all of a sudden become Albert Einstein when they are doing side work for themselves.
Taichi Ohno says the real cause of any event is 5 steps away. According to him if you ask "Why?" five times you will get to the root cause of any problem, ergo if you simply focus on the symptom you will never get any traction.
People do want to be successful but the majority want to be successful without risk or cost of commitment. If you can create a reward structure that only contains joy but no downside then you might get somewhere.
Sometimes you just need a little bit of accountability. This is where lists really work, particularly if the list contains some way sign off on any activity. There is a reason when you buy a pair of levi jeans the pocket contains a slip of paper that says "inspected by Billybob". If you introduce some identifiable accountability you will be able to mitigate some of the meandering.
When you think about it all business is about mitigation. It is all about managing risk. You don't make a nickel building cabinets. You make all your money selling them. The rest of it is just trying to keep from losing what you started with.
A kid I grew up with used to caddy for his dad. At the beginning of the course his dad would give him eighteen $1 bills. Each hole where he pulled the wrong club his dad would take back a dollar. This is way different than positively rewarding the kid for success. It's easy to feel ok about your day if you end up richer by $6. If, however, you started with $18 every dollar you surrender is statistically significant.
Lists are great, I think of them as travelers, like a check at a restaurant. The order is taken, given to the cook, taken back from the cook by the waitress, given to the customer, taken by the customer to the cashier, the manager then reviews all of the checks for complaints, complements, and that the numbers are in sequence and that the amounts reconcile.
Great system time tested, I have used them.
As to the other you can skip a lot of the folderol by hiring upbeat enthusiastic people.
You see apathetic people want to be apathetic, angry people want to be angry, cheerful people want to be cheerful, enthusiastic people want to be enthusiastic.
When you hire angry people they don't want to make things go right and even worse with apathetic people. Cheerful people do make things go right enthusiastic people even more so.
Out of hundreds the half dozen or so employees that were real standouts were cheerful or enthusiastic people. I loved working with them.
The angry ones not so much... the fearful one even less so and the apathetic ones i don't know because I did not hire them.
Try it if it doesn't work I will give you your money back. You ask how can give you a money back guarantee? BECAUSE IT WORKS.
I let a few days go by and I am again buried by a mountain of great input.
So, one thing I had not mentioned is our part time office assistant. She works three days a week through a temp agency. I have been thinking about cutting her position but she keeps a lot of the noise out of my head regarding bookkeeping, bills, robodialers, social media, etc. She also could be a useful key to gathering the data from the workers and helping to organize it, e.g. she could be responsible for hounding them and then presenting the info to me in a useful way. On the other hand, the position is about $1,800/mo that we don't seem to have.
The big leap in sales is attributable to a couple of things:
1. We have enjoyed some repeat business from a large high-end remodeler.
2. Demand for remodeling is through the roof, especially in SF. We pick up a lot of the jobs that the other shops don't have time for.
3. "Sales" was not something I actively did before. I was a one-man shop, and as such got stuck in the feast-or-famine cycle as many do. I realized I had to hire help to allow me the time to get out there and generate new business. Now maybe I have over-hired to that end.
Some of your advice leads me to firing the #2 worker. He has only been with us for a couple of months, but he's gotten a fair shake. I hesitate to let him go mostly because we just signed another large contract (I'm about to bid an even larger one that looks promising), and as much as we talk here about hiring only great people, we also have a difficult time finding them. With the local uptick in construction the great people are all employed.
"So, one thing I had not mentioned is our part time office assistant. She works three days a week through a temp agency. I have been thinking about cutting her position but she keeps a lot of the noise out of my head regarding bookkeeping, bills, robodialers, social media, etc."
Short answer NO. If you look at that organizational chart (E-myth) you will realize that you wear way too many hats. The solution is to get other people to effectively wear those hats. She is wearing a bunch of them. If you are a control freak type, get over it, or else you will be wearing all those hat in perpetuity.
It sounds like you spotted the cause of the boom. But there is a danger in that, in that as soon as things get slower this customer will go to their other vendors. It is a common mistake to become too dependent on a single source of income and not market or sell. Then when this source goes away you are high and dry.
Do you then say no to this big customer? No but you do have to find other sources of income.
I suspect you do not have the money for 2 reasons, you do not charge enough, and you are not efficient/organized enough.
The good news is that you seem to have found an area of the market to create a niche within.
The trick to hiring people is to fire quickly and hire fast.
You need to have some sort of metric to judge whether the worker is producing or not. 3+ months is way too long to determine this. He is either producing within 2 weeks or he is gone, upbeat or otherwise.
If you need 1 guy hire 2, if you need 2 hire 4. This way you are in the driver's seat not the other way around.
If you find a keeper ask him for referrals.
Most guys these days use Mexicans (if this sounds prejudiced too bad, I have many friends who are Mexicans) when you find a keeper ask him for referrals. And remember the up beat thing. Oh as if you don't have enough to do learn to speak Spanish, they love it when you can speak Spanish, also use good manners with any workers. In other words NO arrogance, treat people like they are important because they are. Not that this is easy to do when you have a deadline. Don't ask me how I know that...
I have seen a lot of good comments down below, including E-Myth, measuring, meetings, constant management, numbers, lean, etc. All good.
You need to find out the hedgehog concept (the 3 circles - one of them is passion) of each of the employees (starting with yourself) and then secondly: discipline. Third: system.
Don't try to find solutions if you haven't got the best people on board.
First WHO, then WHAT.
Pat, you are right, we are not charging enough, but we have received consistent feedback that our prices are at least as high as our competitors. So we may need a combination of different customers and better efficiency. I just picked up "2-Second Lean".
You make another good point about our eggs being all in one basket with the big remodeler. I've been working on getting a foot in the door with some of their competitors, and creating some other sources of revenue.
"You need to find out the hedgehog concept (the 3 circles - one of them is passion) of each of the employees (starting with yourself) and then secondly: discipline. Third: system."
Is this a Venn diagram?
Lean has it own logic of asking why 5 times. This is really great for an introduction into logic as well as the Venn diagrams.
Learning logic is a good idea as it gets you to see real problem. This is one of the bigger problems in business in that you have to make decisions without enough information. By using logic you can become more skilled at picking what is important and what is not.
One time I had a hard time keeping a someone at the foreman position. Then by using logic I was able to see that one individual was constantly stirring the pot to protect his own job. This led me to the conclusion that this was occurring. Several months after I got rid of this guy the new foreman said we haven't growled at each other for several months why is that? I said what happened several months ago? He said that is when you got rid of the pot stirrer.
Often you will decide something is important when it is not.
For instance you may decide we should be working on something because it is important when it really is not but you just like doing that work. Or maybe get rid of somebody who is really helping you or buy a piece of machinery because you think that it will change everything when in reality it is more hope than reality.
Not to say machinery is a bad idea, if you are factory you live and die by your ability to produce and machinery is what helps you to do that.
But the demand that you depend on can dry up and those machinery payments loom large, on the other hand you can make the machinery payment for less than it cost you to pay a helper. Logic can help to make this kind of decision.
In your situation it is far more important to pay all the bills.
But using the 5 whys is a great way to start using logic. Or my version is just ask how come, until you can't ask how come anymore, at which point you have arrived at the truth.
I'm In a very similar situation myself at the moment. Although my guys are great workers with no attitude problems, just not working cohesively and I see a lot of room for improvements to efficiency via lean process.
Poster has continued to mention there is not a lot of money lying around. Could this just be a cash flow issue? Maybe your trading terms could be improved in your favor to increase your capital and give you more confidence in spending on more labor (or probably more importantly, better labor).
You mention that your customers say you are very closely matched in price to competitors. For one thing that's probably BS, generally that means your a little cheaper which isn't necessarily a bad thing. If your cabinets are rolling out in tune and on time then don't sell yourself short. RELIABILITY AND PROFFESIONAL SERVICE are a big part of a desirable product.
I tend to agree with you about your first post. You would have to be pretty good at what you do before I would put up with an attitude.
The second part about intimidating your workers not so much. With that kind of attitude what you will probably end up with is people who will only stick around as long as they absolutely have to. That somehow does not seem like a recipe for success.
For better or worse, I don't do Machiavellian. I have however become deeply interested in the Lean concepts, in particular how to build a culture of constant improvement. We have started doing the morning meetings, with goals for the day and a quick pep talk about Lean. The next 10-15 minutes are for 3 S's. At the end of the day is a quick briefing on the day's work.
We are finally collecting time data. Each employee has the Toggl app on their phone and they log in and out of activities. They have actually been very diligent about it and we already have a ton of information about how we spend our time.
The attitude in question hasn't been an issue, it was more an indication that my management skills were lacking. We have a ton of work in the pipeline so firing anyone with potential would be a mistake, these guys are still some of the best employees I've had yet. If the workload and the cash flow looks right I will bring back the "experienced guy".
The next hurdle is going to be getting everyone into the Lean mindset. I'm pretty fired up (although not as visibly as Paul Akers!) but it's going to take some work before everyone really gets it.
If you want to come to grips with Lean you are going to need something a little more substantive than the 2 Second Lean book by fast cap. Read 'The Toyota Way' by Jeffrey Likers or 'Implementing the The Theory of Constraints' by Mark Woeppel. They use all 5 of the S's.
The best way to boost your productivity is to decrease your batch size. You don't have to add any resources to make this happen. In fact you will see that this increases your capacity.
Think of it this way: When you get a kitchen in your shop with 30 cabinets it is hard to figure out just where to start. You'll often pick something first just because it will need to be done eventually anyway. You create a lot of puddles in your shop that need to be dodged and need extra (non-value added) management cost.
Compare that 30 box kitchen with a simple bathroom vanity with 3 boxes. The vanity is a no brainer. Every body knows what to do next and you can spank that out of your shop without even breathing hard.
The trick is to figure out how, where possible, to turn that 30 cabinet kitchen into 10 bathroom vanities.
I'm a big fan of Lean and 5S, but let me address a couple of items I've not seen here.
Parkinson's Law says that "the work expands to fill the time available." You might give your team smaller bites to complete during the day and review their progress at the end of the day.
Secondly, have you personally "crossed the line" with respect to your leadership. It is easy to talk a good game, but disciplining or terminating someone is difficult in practice for many. I've seen a lot of managers tell one of their team to not be late to work, and then physically look the other way when the person arrives late. This is a discussion you've got to have with yourself. If you're going to be successful with a team working for you, you've got to hold folks to your standards. I don't like it anytime I've got to hold someone accountable, but I do it. The nice thing is it gets easier over time.
One approach I have had success with in the past is to have newbies bring each drawer box to me to inspect as they come off the line.
After about the third or fourth one they seem to have it down so I add another task. They have to now time each drawer box as they build it and report the time to me. As soon as they can bring me a perfect drawer box every 20 minutes they don't have come see me any more and we move to the next product.
What this does is put the management costs onto them. I don't have to remember to check in on them and they learn that how long it takes to make something.
This is also a better way to imprint skills. If you build three drawer boxes this morning and four this afternoon and four more tomorrow by the end of the week you've been up to bat ten times. This is a way better system than giving them all thirty drawer boxes this week and expecting them to remember all the steps & sequences two weeks from now.
It also brings the drawer boxes to where they are needed at the rate they are needed. Thirty drawer boxes takes a lot of real estate to store. Better to have them built just in time and stored inside the cabinet they ship with than spread all over your shop competing with you.
Jimbo, I have a hard time reprimanding an employee for being late..definitely need to work on that. I liked JV's idea about the paid lunch.
Your points about breaking up the work make more sense now. I can't see the point in doing small batches of spray work, we could easily end up with unmatched batches and endless dry time. Running the nested CNC in small batches doesn't make sense either, the bigger the batch, the less waste there is. However, giving trainees small bites to master at a time makes all kinds of sense.
I'm not familiar with the processes youare speaking of, such as lean. but in our turning and millwork shop, what I've found works best is to modulate groups of employees. 1st employee to finish their task moves to the end of the line of alternating tasks between other employees, and so on until final audit. It promotes team building and more experienced employees are able to catch the mistakes of less experienced people before they become a major issue
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