The aim of this case study is to show how benchmarking corporate social responsibility improves the bottom line. The principles described below relate to most organisations facing challenges to implementing policy before reaping rewards.
Facing The Challenges
UK building firms operate in a tough commercial environment. Their industry has in the past suffered from a low qualified skills base due to high student drop-out rates from Colleges. Employers in this sector have often been slow to adopt national standards such as Investors in People and many firms experience difficulty in recruiting and retaining staff aged 25-40, particularly females.
This problem is forecast to become even more difficult over the next few years, with a shortfall of over 300,000 construction workers in the UK South East region.
Besides difficulties in recruitment, firms also face significant limitations accessing natural resources such as land and materials. Costs increase at short notice in projects which have a long timescale, creating budget problems. Margins are tight and project profits are dependent upon the reliability of workers on site.
Yet many people are sub-contracted, mobile and working outside in all-weather conditions where health and safety hazards are frequent, and where operating procedures are not always understood. Absenteeism can quickly turn a low margin into a loss, with subsequent temptations for operators to cut costs and corners.
Overcoming The Barriers
The company was founded ten years ago by a small team of qualified builders. Without borrowings or venture capital they have become recognised as one of the most successful construction businesses in Europe.
They were one of the first building companies in SE UK to be recognised as an Investor in People. Since then have come awards for Best Use of Information Technology, Business in the Community, Citizenship, regional Mega-growth, Global Entrepreneur and others. The Directors have consistently and continuously applied a range of international benchmark standards to drive their business to become the best.
Their business processes have focused on creating strong internal and external partnerships. Active involvement in best practice clubs has stimulated the sharing of innovative ways to improve quality and reduce costs. Their open book policy allows customers and supply chain partners to see project budgets and forecasts, generating trust and mutual co-operation. Their teams onsite win bonuses based on work quality, ensuring workers support each other.
They have developed an employee operations manual through an extensive consultation process with staff whose contributions have ensured internal ownership and understanding. This has created the platform to translate their ethical policies into practical actions on construction sites.
Reaping The Rewards
Their employee retention rate has exceeded 90% over the last 5 years, reducing recruitment costs. Last year absenteeism for the whole company fell below 10 days. Project management training has been supplemented by allowing employees time off working on local community projects, reducing external training costs.
Stability in the workforce has had knock-on benefits with referrals from customers delighted with delivery. Year on year growth in turnover has been over 100% to create a stable balance sheet of over £10 million. Publicised awards for best practice resulted in savings due to free press advertising, and they gain all the benefits of PR without external agency fees.
The bottom line double digit margins have allowed profits to be ploughed back into continuous service improvement. Two thirds of their clients say the company’s community involvement has influenced their choice of contractor.
The local community benefited last year when they recycled 500 tons of waste timber, allowing a specialist waste management firm to employ more local people and grow. In the words of a Housing Association client, the Managing Director “has embraced the partnering ethos, worked above and beyond the call of duty, and has demonstrated exceptional build quality and finish.”
The company Managing Director has even been invited to Downing Street to show government policy-makers how ethical principles can be practically translated into bottom line benefits.