Emergency Landing
Grand Homes models itself after a customer-friendly airlines.
In December 2008, Grand Homes was teetering on the precipice. During the previous six months, this Dallas-area builder had sold only two homes, “and both of them cancelled,” recalls owner Stephen Brooks. Between Christmas and New Year’s Day, he was forced to lay off 35 of his 300 employees. “We were falling off of a cliff.”
What prevented that descent, says Brooks, was the December day when he marched his entire company into the headquarters of Southwest Airlines to learn about the carrier’s performance-based, people-first business model.
“We thought we were in a product business,” says Brooks, 60, about his 24-year-old business, which has won over 100 awards for its houses and designs. That was until Grand’s customer satisfaction ratings, as tracked by J.D. Power and Associates, compared unfavorably to other local builders, and exposed flaws in the builder’s business model. “We had to remake our company.”
Putting people first, though, wasn’t easy when Grand was cutting its employees’ paychecks by 9 percent and eliminating its contribution to their 401(k) plans. Brooks enlisted consultants Chuck Shinn and Bob Mirman “who did all kinds of training” but also identified employees “who didn’t understand what we were trying to do and needed to be replaced.”
The biggest change Brooks needed to make, though, was in himself. Brooks’ management style has been charitably described as uncompromising. When he hired his son Beau to run Grand’s land acquisition department, his first words to Beau were, “Don’t embarrass me.” Now, he’s got nothing but praise for his son, who between August 2009 and December 2010 completed 23 land transactions that put more than 2,500 lots under the builder’s control.“I used to be old school and yell a lot,” says Brooks. “I still yell, but nothing is better in life without a better attitude. I wake up every day realizing that what I get is what I give.”
Image Transformation
Southwest Airlines’ business model has been a surprisingly good fit for a builder that already had pretty good systems in place. Through thick and thin, Grand Homes maintained a conservative balance sheet. It controls 90 percent of its lots through options. Weekly studies identify and address underachieving markets it calls “red zones.” And daily reports hold Grand’s salespeople accountable.
Part of Grand Homes’ transformation, though, can be seen in its designs and construction. Brooks tapped consultant Scott Sedam to remake Grand’s products—it has 2,400 plans in its database—so homes could be value-engineered. (Its flex-design house plan, called Life Spaces, includes a room that can be modified for 18 different uses.)
Also central to its transformation has been Grand’s shift to online marketing. More than one-third of its business in 2009 could be traced to an electronic interface with a customer. Brooks’ wife, Melissa, who runs the builder’s marketing department, has pushed to expand Grand’s social media presence.
Happy Associates, Contented Customers
Nowhere has Grand’s personality been altered more than in its corporate culture. An internal committee organizes social events and acts as the builder’s ambassadors. Contests, incentives, awards, and thank-yous are part of Grand’s “People Matter” initiative. The company even reinstated its 401(k) contribution in 2010.
“We do an independent employee survey every year, and some of the comments can make you cry, they’re so positive,” says Brooks. Again using Southwest Airlines as his model, Brooks’ recruitment strategy is to “hire for attitude and train for skills.”
Happy employees make for satisfied customers, asserts Brooks. Grand Homes makes sure it stays close to buyers throughout the selling process. Its on-staff concierge contacts them at key “touch points,” from the first design center appointment through 10 months after closing. Customer satisfaction surveys go out 30 days, five months, and 11 months after closings. And a customer care rep visits homeowners 14 days, six months, and 11 months after closing to check on warranty concerns. Grand’s warranty program mandates that homeowners receive responses to their requests within 72 hours, and that all repairs are completed within 21 days.
Even before it became a people-first company, Grand Homes took community service and philanthropy seriously. Brooks is active in charitable organizations to which he and his company contributed more than $2 million through 2009. He also helped build two houses for HOPE International’s Homes for Hope program. “Steve has a gift to energize others,” says Jeff Rutt, HOPE International’s founder and president of Keystone Custom Homes. He watched Brooks mesmerize fellow builders at a Dallas HBA meeting, as he recounted his Homes for Hope experiences. “You could hear a pin drop,” says Rutt.
Learn more about markets featured in this article: Dallas, TX.
