What makes a company successful?

In 2010, 323 construction companies went into administration and the numbers of building companies experiencing financial problems had risen 30 per cent (UK Construction News, 2011). Some of the larger companies such as Rok and Connaught no longer exist whilst other companies, like May Gurney and Mears, have managed sizable growth in revenue despite trading under similar conditions. So what makes some companies thrive and some die?

The basis of any organisation is the interaction of the people in order to achieve objectives and the success and effectiveness of the organisation will depend on their interaction and performance. ‘People’ is the one ingredient in a company where it is impossible to copy or clone to ensure uniformity. The objectives, structure and management of an organisation can be minutely defined and repeated time and time again but the actual execution of the operations of the company is invariably undertaken at a level where human interaction and behaviour takes place. It is this informal and unpredictability aspect which gives companies their uniqueness and ultimately contributes to the success in some and failure in others.

This ‘human factor’ was explored by Peter F Drucker who examined how humans are organized across the business, government and the non-profit sectors of society and focused on relationships among humans. He demonstrated how organisations can bring out the best in people, and how workers can find a sense of community and dignity in a modern society organised around large institutions. Drucker was intrigued by employees who knew more about certain subjects than their bosses or colleagues and yet had to cooperate with others in a large organisation. Although there is invariably a need for the structure of an organisation to change to meet new demands, technology and processes, the identification of such a need must come from the operators of the system. 

The provision of a good structure allows effective and efficient organisational performance and although a good organisational structure does not itself produce good performance, a poor structure makes good performance impossible. In whatever organisational form a company takes, and whatever ethos the senior management wishes to adopt, the execution of the operations will rely, time and time again, on the individuality of the ‘people’. Although the consequences of individual decisions can be reduced, limited or controlled through an organisation’s structure, at some point, those decisions will need to be made - at some point the manager will ‘make his call’. 

Ultimately, the success of a company is based upon the ability to effectively process decisions made by managers. A mediocre manager in a well structured company will contribute more to an organisation and its success than a ‘star’ manager whose decisions and actions are stifled in a poorly structured system. Clearly where there is the combination of a ‘star’ manager and a well structured organisation you will see even greater success. No doubt such a combination is present in those top performing construction companies such as May Gurney and Mears whilst Rok and Connaught may have had a more unfortunate combination. 

Which way do you want to go?

Are Managers Born Or Made?

Early 19th century researchers and historians such as Thomas Carlyle exalted the ‘Great Man’ theory of leadership citing history’s great and famous such as Julius Caesar, Napoleon and Abraham Lincoln as representing natural leaders taking control in tumultuous times. These leaders and managers of men did not have the benefit of modern management teachings and in many cases, such as Alexander the Great and Genghis Khan, achieved their leadership roles at an extraordinary young age.  Critics of the Great Man Theory identified that many of these leaders achieved these positions through their birth-right and were subsequently influenced by social, educational and opportunistic factors. Undoubtedly gender was a major factor in the progression of these early leaders and indeed, the recent Ambition and Gender Work Report (2011 Institute of Leadership & Management Development) still finds that nearly three quarters of Women believe that barriers to advancement still exist.

Dolly & Friends '9 to 5'

Early views on the achievements of leaders adopted the ‘Trait Theory of Personality’ identifying the broad dispositions of a person and the interaction of various unique traits of individuals. This identification of the ‘human factor’ in management has continued throughout the twentieth century with the development of management theories and studies from the initial Classical writers on to the Contingency view where more emphasis of human nature is taken. During the latter half of the last century, the role of the manager has now become open to the ‘masses’ reducing both the gender and class distinctions from where it originally evolved.

Nevertheless, there are people who excel in their managerial role -  ‘Management All-Stars’ with a desire to manage. Many relate this desire to manage to an early experience in life although clearly the trait of the person will dictate how such an experience is exploited and  although nurtured and fine tuned during life due to surroundings and stimulus, the basic traits are with you from birth. The Chess Grand Master, Bobby Fischer’s passion for puzzles was combined with endless hours of studying and playing chess. Born with this passion, Fischer became what he was and this was summed up by his rival, Garry Kaspsrov as ‘an innate gift’ .

So the answer to the question ‘Are managers born or made?’  -  they are made but the answer to the more pertinant question, are ‘good managers born or made?’ ; the answer is, without doubt, born.

Condensed extract from Paper

 presented by Daniel Staines

What Role Does Europe have in Shaping the Future of the UK Construction Market?

After 12 years of sustained growth, in the second quarter of 2008, the construction sector entered its worst economic downturn since the Second World War. This year’s Autumn Statement predicated economic growth to be -0.1%, down from 0.8% forecasted in the Spring budget and confidence in the construction business outlook is now the lowest for almost four years.  The CIPS Nov 2012 Index continues to show an ongoing subdued trend in output across the construction sectors of Housing, Commercial & Civil Engineering reflecting the UK economy as a whole. Furthermore, the UK Contractors Group (UKCG) have forecast output to fall by almost 6% over the next two years, before a return to growth in 2014/15 and identifies a bleak 12 month period ahead due to a lack of new projects replacing those recently completed; exacerbated by squeezed budgets and a rise in material and fuel costs.

Public new housing and public non-housing have been the worst hit sectors closely followed by the private industrial and private commercial sectors respectively with 49% of contractors reporting falls in profit margins.

The recession has already had a particularly large negative impact on the house-building sector with a fall from the £4.5bn in 2007/08 to approximately half this at the present time. Infrastructure expenditure, conversely, has continued to rise and is now approximately two thirds higher compared to that of 2007. Unfortunately, house building is invariably undertaken by UK firms whilst the larger infrastructure projects are undertaken by European or International companies. In addition, the UK sources £12 billion of construction materials from abroad whilst only exporting half of this – a net balance of £6 billion - 60-65% of this trade is with the Euro zone countries.

Clearly there is a need for the construction market to take advantage of any opportunities they can and whilst the Government are and, have been, implementing various initiatives and funding for the home grown market, the more robust companies at present are those who have looked to overseas markets. 

Compared to its European counterparts, the UK has suffered from a more pronounced decline in construction activity since the onset of the recession. In May 2011 the Cabinet Office published its Construction Strategy document. It noted that it was widely acknowledged that “the UK does not get full value from public sector construction” and that the Government had “failed to exploit the potential for public procurement of construction and infrastructure projects to drive growth”. 

The Government’s austerity measures have positively contributed to the confidence of the British Pound compared to the majority of the Euro zone but the UK economy remains fragile and the exposure of some of the major European suppliers with UK divisions adds an additional source of risk to any potential recovery.

In order to survive, the UK Construction sector must change and broaden its geographic horizons to prevent the North-South divide becoming a UK-Euro divide. If the government is to lift the economy out of recession quickly, it needs to ensure that it focuses clearly on public and private investment, rather than a series of announcements and initiatives that lead to very little activity. If it is to ensure that the path remains open to growth then it must encourage the industry to embrace the opportunities of Europe.