Purpose and Background
The National Association of Home Builders (NAHB) is a trade association whose mission is to enhance the climate for the housing and building industry. A top goal for the NAHB is to provide and expand opportunities for all potential home buyers to have safe, affordable and decent housing. The NAHB also works with federal agencies on regulations affecting the housing industry in areas such as mortgage finance, codes, energy and the environment. According to the NAHB, about eighty percent of the homes built in the United States are constructed by NAHB members. In 1993 the NAHB and Reed Business Information, publishers of Professional Builder and Professional Remodeler magazines established the National Housing Quality Awards (NAHB website). The National Housing Quality Awards (NHQ) was modeled after the Malcolm Baldrige National Quality Award program and represents the housing industry’s highest recognition for achievements in total quality management.
The NHQ award promotes and rewards best practices throughout the home building industry. It recognizes home builders for being focused on quality for the customer in construction, business management, sales, warranty service and design. The NHQ award is open to all U.S. home builders that believe their company meets or exceeds the qualities above. The home builder completes an application process and goes through an extensive interview process that requires a high level of commitment from the company and their management team. According to the NAHB application, every applicant will receive a written report and applicants that are chosen for site visits will receive detailed reports that provide objective benchmarking for quality improvement.
The program is more than an award; many home builders use the award as a process for improving their processes to build a better home for the customer and a better company for their shareholders. In the home building industry, the expectations for high performance from the customers gets higher every year. Especially in the current housing market it is becoming more critical than ever that builders look for new products and processes that help to improve their companies in areas such as leadership, performance management, customer satisfaction, strategic planning, construction quality, trade partner relationships, business results and human resources according to Steve Carroll of the NAHB.
The NHQ awards are judged by a qualified experts who evaluate all the applicants and selects finalists who demonstrate high levels of quality achievement based on leadership, strategic planning, performance management, customer satisfaction, human resources, construction quality, trade relationships and business results. The experts can request additional information during the application process, including customer satisfaction surveys, company references and other information related to judging the criteria. In the Leadership category the panel experts will look at the company mission and values to determine if they guide the organization toward a common purpose. They review how senior management reinforce and instill the mission, values and vision in the company as role models and through empowering employees. They will also look at how the company demonstrates public responsibility and good citizenship while improving the home building industry. In the Strategic Planning category the experts will look at how your company assesses and will address the key strategic challenges that the company faces in the next one to five years.
They look at how the challenges are identified and analyzed and the overall plan development, deployment and feedback for the company including how the plan is tied to the mission, vision and values. They will review how the plan leverages the company’s skills, experience, knowledge and the lack of skills, experience, knowledge and resources. In the Performance Management category the experts review how the company develops, manages, measures, and improves the key processes to achieve performance excellence. The Customer Satisfaction category allows the experts to look at the company’s design and delivery of products and services with a high level of customer satisfaction. The applicant will need to address how the company identifies market segments, the level of focus on the market segments, how product features and service are selected to best serve the market segments that were identified, how the company develops customer relationships, key factors in customer satisfaction and how the company obtains and utilizes customer feedback to improve performance.
The Human Resource category addresses employee selection and development practices, motivation, satisfaction and compensation as it relates to the growth and success of the company. The experts will review the work environment, the morale of the employees, the benefits and the company culture. The applicant will need to address workforce development, staff performance management, and how both align with the company’s goals. The Construction Quality category will allow the experts to review the methods that the company uses to drive quality in the home construction process and ensure high performance and trouble free products and services.
Applicants will have to discuss the quality standards that are communicated and demanded from the trades and how the company continues to educate and reinforce the quality standards to both employees and trades. The experts will ask how new plans are reviewed for quality and how the customer is involved in this quality review process. Applicants should be prepared to describe the customers’ post closing experiences, quality recognition programs and the company’s warranty processes. The Trade Relationship category allows the expert panel to review how the company creates high performance relationships with the trade partners.
The applicant should be prepared to discuss how the company establishes mutually beneficial relationships, trade partner selection process, problem avoidance through trade involvement and trade partner feedback. The final category is Business Results. Applicants need to present the measurements of the business benefits resulting from the company’s high performance practices in the financial, operational, customer satisfaction and warranty areas. The experts may ask for customer satisfaction results from the last one to three years including the customers’ willingness to refer other buyers, financial results, employee satisfaction, trade satisfaction and operating metrics for the last three years.
Benefits of the Award
Many of the home builders that prepare the NHQ application feel that the application process and the experts’ comprehensive evaluation report are valuable tools for planning change to improve their business regardless if they win the award or not. Many of the award recipients find that the greatest rate of improvement occurs in the year following their application or win (NAHB). Shea Homes and Pulte Homes found that the NHQ award process helped them identify opportunities to improve and allowed them to perfect processes that improved the quality of their product and service. Improving total quality management can lead to streamlining processes that will reduce costs, improve the quality for the customer, reduce warranty calls and increase the bottom line for the company. The NAHB encourages award winners to publicize and advertise the achievement to distinguish the company from the competition, establish the company as a top quality builder and raise the company’s reputation as an industry leader.
Winners are featured in Professional Builder magazine articles that highlight their quality management principles and will participate in a NHQ award panel discussion at the International Builders show which is the largest home builders’ convention in the United States. Benefits to applying for the award are endless for home builders that are willing to commit the time and effort needed to complete the application process. The application process forces many of the applicants to look at the processes in the company that contribute to ensuring total quality and make changes to allow the company to improve and focus on the company’s mission, vision and values. The drawbacks to the NHQ award process is that it will take a commitment of time and energy to look at the quality processes in the company to analyze if it is moving the company in the direction of the mission, vision and values. Some companies may feel that this is a waste of time and energy or can be over whelmed at what processes need to be improved to get the company on track to improve quality.
Winners are recognized in three categories: gold, silver and honorable mention. The gold award is given to companies that have achieved a national benchmark level in each area of evaluation. According to the NAHB website, gold award winners have mature, fully integrated quality management principles and consistently demonstrate high level sustained financial results. The silver award is given to companies that are industry leaders in most evaluation areas, they have refined business practices and they exhibit good financial results. An honorable mention is awarded when companies are recognized that demonstrate an understanding of quality management principles, show an improvement process and good financial results are achieved in most areas. Below is a list of winners, the award that was received and the year it was awarded (NAHB website).
Many of the applicants that have participated in the NHQ process, whether the company was awarded or not, have said that the application process helped the company by having to look at all processes critically and make changes to improve the quality management for the company overall. Scott Thistle, president of Brookstone Homes, said, “The award is a critical component of our commitment to customer satisfaction. By going through the NHQ program for the second year, it has enabled us to continually fine-tune our quality assurance systems and see a direct positive impact on our customers and their experience (Brookstone Homes).”
Home Builders that apply for the NHQ award know that the process requires a lot of time and effort prior to submitting the application to the NAHB and could involve potential changes to the operational processes of the company to keep the company focused on total quality management. Grayson Homes president, Cindy McAuliffe said “At Grayson Homes, we differentiate ourselves from others with a deserved reputation for quality homes and products, processes, service, and people. Our participation in NHQ programs keeps Grayson Homes and its trades focused on product, process and experience improvement (Mid-Atlantic Builder).”
In reviewing the NHQ award and the process involved in applying for the award I found that it was a benefit to each of the home builders that took the time, energy and efforts even if the company did not win an award. Each of the companies that applied where able to review the quality processes that were in place, review the experts written report and modify the processes to achieve a higher level total quality management that improved the company’s quality focus for internal and external customers. While I do feel that this would be a benefit for my company I believe that we would have a lot of work to do in streamlining processes to ensure that company wide we are using the same quality processes that will allow us to grow while following our mission, vision and values.
The company was a small company based in two markets that grew quickly to fourteen markets prior to the housing market boom. This fast growth did not allow for the company to ensure that quality processes were being handled in the same manner from division to division. The company has in the past three years established a strategic mission for the company and continued with the values that has allowed them to achieve the ranking of the 24th largest builder in the United States. The NHQ award process would force the management team to review what processes where in place in all divisions and get on track with companywide policies and procedures so a customer buying a home in one division could expect the same great product and service in another division.
Brookstone Homes Newsroom.” BrookstoneHomes.com. 15 Mar. 2008. <http://www.brookstonehomes.com/newsroom/2006_august2.asp>.
Carroll, Steve. Telephone interview with National Association of Home Builders Research Center. March 14, 2008.
Mid-Atlantic Builder Corner Newsletter.” Mid – Atlantic Builder. 16 Mar. 2008. <http://www.homebuilders.org/file_depot/0-10000000/0-10000/48/folder/40005/ MBX_0105_60-70.pdf>.
National Housing Quality Award.” National Association of Home Builders Research Center. 15 Mar. 2008. <http://www.nahbrc.org/technical/awards/nhqa.aspx>. Stromberg, Meghan. “NHQ Best Practices.” Professional Builder. September 2001. 1 Sep. 2001.