Weathering the storm Featured

7:00pm EDT February 24, 2008

Joe R. Zimmerman is a hallway walker. The division president of KB Home’s Houston office likes to get out and wander through the office and the home-building company’s various residential developments throughout Houston and just talk to his 200 employees, listening to what they have to say.

“I’ll stop and talk to people and make myself available,” he says. “My door’s always open, but I’ve learned that you actually have to get out of the office and go to them. They’re not going to come to you, even though that door might be open. You’d be amazed what you can find out and some of the ideas that people come up with. You won’t know what people have to offer unless you get out and follow them in the overall process.”

His hallway tours aren’t just about being friendly. They provide him with an opportunity to build rapport with his team, exchange information and strategize based on current facts.

As the housing market has taken a downturn and the mortgage industry struggles, he is constantly evaluating KB’s strategy and talking to his team to make sure the company is making all the right moves.

While times are tough, it didn’t come as a surprise to Zimmerman. KB is fact-based, studying data on a weekly basis to see where it is in terms of sales and other forecasts. He also had a conversation with a local mortgage company to get an opinion inside that industry and combined that with the information he gleans directly from his employees, and the company was able to post $381.1 million in 2006 revenue.

Navigating a down market can be challenging, but here’s how Zimmerman conquers the biggest challenges of staying ahead of a volatile market.

Have the right team in place

The right team of employees can help you weather the storm and get you to the other side of a down market relatively unscathed.

Zimmerman first looks internally for employees he can promote, then moves outside if he cannot find a candidate. The key factors are integrity and the right attitude.

“Integrity is someone who may insist on the highest standards of behavior in all things, including morals, ethics and honesty,” he says. “Attitude sets the tone for what you do in all walks of life. A great attitude and a willingness to learn can overcome an extreme failure every time, if you learn from it and pick yourself up.”

During an interview, Zimmerman will ask more situational questions of potential employees to help see their attitude and integrity.

Having the right people in place allows you to delegate tasks to others who might do the job better.

“Find the best people, and then give them the authority to run that piece of their business and change it if they need to,” Zimmerman says. “If the process is not working, change it. You’ve got to have people in place who have the intellectual capacity to say, ‘It’s not working; let’s figure out something else.’”

You need to promote a team environment throughout the company so employees know it is valued. Get employees involved in different processes, such as creating a business plan or establishing goals to get buy-in.

“Then they’re committed,” Zimmerman says. “It’s not your number now. It’s not Joe Zimmerman’s plan anymore, it’s their plan.”

He says one of the most important things to remember during a tough time is to celebrate successes. It helps retain people by keeping morale high.

“It keeps people focused on the positive,” he says. “People need to feel good about what they’re accomplishing, and their morale needs to be kept up because they’re hearing a lot of external stuff, most of which is not true. You’ve got to be able to lift people up, continue to focus on their professional development, and tell them openly and honestly where you are positioned.”

Zimmerman has monthly division meetings, where each department gives an update, then shares these successes and celebrates them. It’s important to celebrate those successes early on during a tough time, which is something Zimmerman wishes he would have done sooner.

“It came to me through feedback,” he says. “We weren’t celebrating the things that we accomplished. Your inclination when you get into a tough time is to focus on what are you going to do to fix the next issue that comes up and not what have you already done and accomplished within the last month, week, day or hour. You need to focus on those accomplishments so people feel like they’re moving forward.”

Successes don’t have to be big, they can be the little things that people do and can be celebrated any time during the year.

“You don’t have to wait until the end of the month or the year,” Zimmerman says. “Try to find the things that people do right and praise them. For the things that we fall short on, we can always get around to fixing those.”

You’ll find out about a lot of these successes by walking around and talking to employees.

“If you sit in your office, I don’t think you’re going to know what’s going on in your business,” Zimmerman says. “I get out and wander around and talk to people. If you listen, they’ll tell you what’s going on. They’ll tell you about the little successes that don’t show up in the reports, and those are the things you focus on rewarding.”

Focus on customer relationships

Employees are not the only ones affected by a tough time in a company. Customers are equally as affected, so it is important to build solid relationships and focus on them, so customers will continue to support you during this time.

Zimmerman meets with employees from various departments each week to study internal reports that are used to measure communication with customers, so they know what the customer wants and are constantly focused on each one. He says communication is an important tool in customer relationships.

“You have to do what you tell somebody you’re going to do,” Zimmerman says. “If you tell them you’re going to be there Tuesday at 2 p.m., you better be there Tuesday at 2 p.m. Tell the truth every time.”

Your customers need to be able to look to you as someone they can trust. Zimmerman says always do the right thing, even if it will cost you.

“When it costs you personally, maybe you don’t get that promotion, but you made that right decision,” he says. “Everyone has a bit of an internal compass that tells you what’s right or wrong. Sometimes it’s easier to figure out, but you’ll know when you have to make that big decision and it’s going to cost you money, it’s still the right thing to do, and you go ahead and make it.”

KB Home has built its reputation on valuing the customer and making sure the customer is No. 1. The company does a customer survey to find out exactly what customers want in their homes, which drives the decisions the company makes in regards to home building. The Houston office has also been rated No. 1 in the company in customer satisfaction, according to a survey measured by JD Power and Associates.

“We’re serious about taking that data, analyzing it, and making changes in our process and product so we better match those customer expectations,” Zimmerman says. “Our goal is to exceed the customer’s expectations every time, not just once in awhile. If you build a business on exceeding the customer’s expectations, you’ll be successful.”

Even with the downturn, the Houston office was able to post revenue of $381.1 million for fiscal year 2006, up from $370.2 million in 2005, because of its focus on customer relationships.

Don’t hide anything

It’s important to keep communication lines open with employees so they know exactly what is going on and do not think you are hiding information from them.

“Try to make your communication process as transparent as you can,” Zimmerman says. “What we noticed is that we had to communicate more often during this time and talk to people. You become a conduit to share information from all the departments as a whole, and the focus is communication with the entire company.”

Without good communication during a tough time, employees start to believe the negative information they may be hearing.

“We talk about the metrics of the business and the company’s overall position,” Zimmerman says. “In the absence of communication, people are just going to make stuff up. At least this way, we know we’ve got real information based on fact-based decision-making as opposed to innuendos that may or not be correct and supportable.”

It’s important to turn conversations into dialogues among several people, not just monologues from one employee, and be able to ask open-ended questions that don’t have a simple yes or no answer.

“It’s not just me standing up in front, talking to people during meetings,” Zimmerman says. “People get a chance to ask questions of pretty much anybody from the team. It’s more of a discussion with a big group than it is some kind of presentation to a group.”

Creating a dialogue also allows you to get more feedback from everyone.

“You’re going to have a lot more information on which to make the right decision,” Zimmerman says. “You’re never going to have perfect information, it’s always going to be incomplete. But the goal is to get the best information in the time frame that you have under which you have to make the decision. If you’re a dictator-style manager, chances are people are going to realize you’re going to make whatever decision you’re going to make and their input is not going to be included, so people aren’t going to waste their time giving you real feedback.

“It’s not that you incorporate all the feedback you get, but if employees see that you involve them in the process, then they’re in. The more of it that they see and the more involvement they have, the more trust gets established, and you’ll receive not only more complete information but honest information.”

While KB Home is still going through a tough time and does not expect the market to shift anytime soon, it has put key values in place to make sure it can survive.

“Treat other people the way you want to be treated,” Zimmerman says. “You’ve got a leg up just by virtue of doing that. Focus absolutely on the customer. Have and develop the right team. And then it’s consistent, continual communication.”

HOW TO REACH: KB Home, (281) 668-3800 or www.kbhome.com