5 Ways to Fix a Dysfunctional Construction Company

Here’s how to identify if your firm is poorly managed—and what to do about it.

Wayne Rivers, Co-Founder/President

July 18, 2023

4 Min Read
Tired and worried construction industry worker feeling exhausted and disappointed
Igor Stevanovic/Alamy Stock Photo

One of our consultants circulated an email among our group asking how to help turn around a contractor’s dysfunctional operations, and he used the term “firefighter” to describe the CEO’s behavior. I responded: "Obviously, it's a poorly run company if, as the senior leader, the CEO is constantly firefighting."  

Then I started thinking, "Wait a minute! Why is that a sign of a poorly run company?" I turned that question back to my brilliant consultants, and they gave me solid feedback on nine signs of a poorly led construction company.  

Surely no one wants to manage (or should I say mismanage?) a poorly run construction company. To keep this from becoming your reality, or to deal with a company on its way to being poorly managed, here are nine major signs of a mismanaged business—and five actions you can take to help get the company back on track.  

  1. The leader has misaligned priorities and is often reactive rather than proactive. Firefighting implies, at best, leading from behind. The leader may be tackling the problems cropping up but preventing them is a better use of their time, talents and energy—which trickles down to the team and can stop these “fires” from happening. 

  2. The leader is a micromanager. They look over  team members’ shoulders and suddenly plunge themselves into the middle of a situation, often without knowing the context. Alternatively, they may take long vacations and then storm back into the company disruptively rather than trusting that their team has matters under control in their absence.  

  3. The leader exhibits bad habits. Habits comprise more than 40% of what we do every day, according to research from Duke University. The CEO in question has developed poor management habits over time that allow fires to break out repeatedly.  

  4. The leader has failed to install repeatable processes and systems. They allow one project manager to do things one way, another to do them a different way and yet a third to do them still another way. This lack of standardization creates inconsistent customer, employee and trade partner experiences.  

  5. The CEO fails to learn from their mistakes. The best way to learn from mistakes is to identify avoidable errors and find teachable moments among them so they don't get repeated. I once worked with a bright man. He'd been in the business 20 years. I thought of him as really experienced, and I tended to defer to him. Then it dawned on me one day: He didn't have 20 years of experience. He had one year of experience 20 times! He kept making the same mistakes. How could a veteran of 20 years in an industry make such foolish mistakes? He simply failed to learn from them.  

  6. The mission, vision and values of the company have never been clearly defined. Those line-in-the-sand statements span the organization from top to bottom and bottom to top again. They permeate the company. Contractors that fervently believe in a certain set of standards make decisions based on their mission, vision and values, and they avoid firefighting mentalities. In a mismanaged company, the focus is almost entirely on projects and not on creating the structure necessary to successfully support projects and avoid unforeseen problems. Often, such a company thinks it’s “too busy” to create the necessary infrastructure.  

  7. The company uses outdated technology. Leadership has been talking about their tech woes for years, but nothing has been done about them.  

  8. There is poor accountability throughout the company. The leader doesn't hold themself accountable and doesn't hold others accountable either. 

If you recognize yourself or your business in the nine qualities above, or if you’d like to avoid getting to such a point, here are five actions to take: 

1. Recognize reality.

If you're constantly dealing with emergencies, you've been doing it for 15 years and the previous generation of leaders was facing similar problems, this is a chronic issue. It doesn't have to be that way, but you need to first recognize there is a problem.   

2. Commit to change.

Nobody likes change, and most human beings react poorly to it at first, but it is worth committing to change for the long-term benefit of your company and employees. Develop a plan for how to bring about positive change in the company. Then, senior leadership must advocate for the changes and monitor to make sure they’re implemented. 

3. Set the tone and create a culture of constant improvement.

Make a concerted effort to learn from mistakes. Undertake project reviews at job conclusion to figure out what could have gone better. Develop better, more effective systems and processes for project beginning, execution and closeout.  

4. Choose a strategic direction.

As I’ve said, mission, vision and values are the beginning of any great strategy. Sit down with the company’s key leaders and craft a written strategic direction for your business that will govern and guide behaviors over the next five years or more.  

5. Place value in accountability, especially for senior leadership.

Business coaches or peer groups are valuable for leaders who want to be held accountable, but it can also be as simple as asking a trusted peer for a monthly check-in.  

About the Author(s)

Wayne Rivers

Co-Founder/President, Performance Construction Advisors

Wayne Rivers is the president of Performance Construction Advisors. PCA's mission is to build better contractors! Wayne can be reached at 877-326-2493, [email protected], or on the web at performanceconstructionadvisors.com.

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