AMONG CYNICS, AS WELL AS A GOODLY NUMBER OF UTTERLY sensible individuals, it is an article of faith that a so-called “win-win” deal is not possible. This probably has something to do with the immutable laws of nature, most notably the notion that every action must result in an equal and opposite reaction.
Clearly, these folks have not watched ABC-TV's hit reality series, Extreme Makeover: Home Edition (EMHE), which airs on Sunday nights at 8 EST. Even the most hard-edged cynic would have difficulty maintaining a dry eye as the show comes to an end each week with a deserving family entering their new or renovated home that was completed in a week at no cost to them. Heck, it made Bruce Karatz cry, and he, as chairman and CEO of KB Home in Los Angeles, would certainly qualify as one such utterly sensible individual (if not a cynic).
KB was the second of six of the nation's largest home builders to participate in the show since its inception at the beginning of the 2003-2004 TV season, and more are on the way. After an early-February episode involving Standard Pacific, Beazer Homes was featured Feb. 20, with a home outside of Atlanta in Lake City, Ga. Taylor Woodrow homes was slated for the March 13 episode in Gilbert, Ariz., and Pardee homes will appear before the end of the TV season with a home in Santa Fe Springs, Calif., with the airdate still to be determined at presstime.
KB took the lead role in tearing down and rebuilding a home for a family headed by a single mom with seven chidren, six adopted, and three of whom (all daughters) now live with her—and AIDS. In an episode that aired last Dec. 12, some 2,000 KB employees and trade partners built a 3,200-square-foot home to replace a run-down tract house. Among the furnishings was a piano donated and signed by Elton John, who played and sang to the family during the show.
The cynic at this point might ask what benefit KB Home might have derived from this effort, which vice president of corporate communications Derrick Hall says cost in the neighborhood of $500,000 in direct expenditures by the company, much more if supplier and trade partner investments are included. To Karatz, that question is beside the point. “This family motivated KB Home to take on this enormous feat,” says Karatz. “The more I became acquainted with the Broadbents and their story, the more convinced I became that we needed not only to build them a dream home, but also ensure that it would not overwhelm them, but would be a complete source of comfort and happiness for these inspiring women.”
To that end, Karatz has offered to pay many of the family's ongoing, home-related expenses, including taxes and yard maintenance, for the life of the family (he also donated a swimming pool).
The Returns? Intangible This all translates into a heap of goodwill among the 16 million viewers who tune into the show each week. Whether that translates into home sales remains to be seen, but KB's Hall reports that during the first two weeks after the show aired, the company received some 5,000 pieces of written communication, comprised of letters and e-mail, and more than 10,000 phone calls, both way beyond the normal rate. Hall said many of these communiqués included comments by consumers that, having seen the effort KB made, they would now consider only KB when shopping for a home. To boot, Karatz was featured during a segment on the show as he was ringing the closing bell at the New York Stock Exchange, on which KB stock is traded. The stock did not rise on the heels of the show, but then again, Wall Street is among the most cynical conclaves in the country. To Hall, that image was certainly a boost for investor relations.
That, however, may not be the best of it. Good deeds, it seems, can have a remarkable effect on a company's workforce. “We didn't see an increase in sales activity or foot traffic,” reports Eric Snider, vice president of sales and marketing for Shea Homes in Walnut, Calif., which last fall became the first of the large builders to get involved with the show. But, he says, the company did see a significant increase in Web traffic, and, more importantly, it reaped “a quadrupling of job applications.”
“It was a great team building experience,” says Snider. “The Sheas have a very long, historical tradition of making a difference in people's lives,” he adds. Employees, he says, “felt a real level of commitment.”
Among other benefits the company experienced was the discovery of new ways to smooth out the supply chain in its normal operations, thanks to the quick turnaround time required by the show's production schedule. The Shea home was conceived and designed over a two month period, including the permit process and the unusual circumstance of negotiating with the local gang that controls the neighborhood. The home was built in 96 hours, and the gang got behind the effort and has put word out that no one is to deface or otherwise violate the place. Still, Snider will not disclose any financial details of the build, owing to the “challenged” nature of the neighborhood, South Central Los Angeles. But, he says, “It's changed the nature of how the neighborhood interacts.”
Learn more about markets featured in this article: Los Angeles, CA.