By Michael McGee. To meet the demands of our customers, we have to find innovative ways to solve old problems. An obvious way to innovate is to improve the product through design, technology, and construction techniques. A less obvious way to innovate is to focus on becoming a better company. And the best time to do that is when times are good, so that we're stronger and better prepared when the times and markets change.

Advocates of improvement, we looked for a way to take it deeper. We chose to implement Six Sigma at Pardee Homes because of investigation I had done into other industries and the types of improvement programs and improvement initiatives that were working for them. The more we looked into Six Sigma, the more it became clear to us that we really had three areas that would help us become a better company: products, people, and processes.

We regularly survey our employees and our customers to determine what we can do better. Our employees told us they wanted more training. What we needed was a program to wrap around employee development so that we could measure and evaluate the outcome. A lot of people who run good-sized operations like to put forth new programs and initiatives but find it difficult to measure the results. Six Sigma gave us that ability.

Photo: Courtesy Pardee Homes/Mark Savage

Michael McGee, president and CEO of Pardee homes, is seeing Six Sigma's results. It's all about data. With sufficient technology, Six Sigma gives us a structured approach to collecting, measuring, and analyzing data so that we can systematically eliminate or reduce process problems and increase customer satisfaction. Training Begins

We started formal Six Sigma training in 2002 when we hired a Six Sigma Black Belt to run the program. First, we held what was called "Champion Training" for the 12 people on our executive board, our senior-most managers. We then took 70 employees through first level (Green Belt) training. In 2003, we will put our first few employees through the next level of training, which is Black Belt.

In the first year, we wanted to see some quick results, so we asked our Six Sigma trainees to form Process Improvement Teams (PITs) and take on a particular process and look to improve it within the year. Targets of focus included:

  • Construction cycle time. We focused on this in Las Vegas. And, within the year, as a result of process improvement, we were able to reduce our construction cycle time on a typical single-family home by a week. The team spent a lot of time focusing on the steps involved in the concrete and framing stages. We were able to eliminate some redundant steps and change the order in which they're done. Six Sigma is designed to reduce variability in the processes. In the case of cycle time, this consistency affects the customer. If at the time of purchase, we can give our home buyers a reliable completion date, they will walk away satisfied.

  • Construction window installation/leak testing. Data told us we were spending too much on window warranty repairs. We analyzed our procedures for installing the windows, making sure we included various manufacturers. We trained our own people and the subcontractors with whom we deal, reducing our warranty costs.
  • Construction customer service and warranty response time. We had too much variability between regions in terms of how long it took us to respond to a customer service request and how our people were handling the responses. Through process mapping and Six Sigma methodology, we were able to reduce some of the variability within the process, improve response time, and increase homeowner satisfaction.

What's Ahead

There is an opportunity with Six Sigma to go overboard. There really isn't an aspect of a company that you can't define as a process and then try to refine and improve. Our Six Sigma-trained Counsel of Champions (executive committee) will review the PITs' ideas of suggested areas of improvement and then help them prioritize which ones they should go after first.

We will continue to train employees and look for ways to refine our processes. As with any new program, there can be employee resistance in the beginning, but I've found that employees really do want to improve performance and the company's ability to delight customers. I am convinced that if our employees are given the opportunity to grow and we continue to measure and evaluate what we do, we will continue to become a better company.

Published in BIG BUILDER Magazine, February 2003