Twice during the last 10 years, the home improvement industry has appeared at the top of the Consumer Complaint Survey Report fielded by the Washington-based Consumer Federation of America. “Home improvement not only came in as the most common complaint to consumer agencies this year,” wrote the non-profit agency’s research director Jean Ann Fox, in 2002, “but was also named as the fastest growing complaint category and the type of industry in which a company is most likely to go out of business and to reopen under another name.”
Rick Edwards, owner of Custom Patio Rooms, a sunroom manufacturing and installing franchise headquartered in Pittsburgh, says that in his six years sitting on the board of the Better Business Bureau of Western Pennsylvania, he’s seen many home improvement company complaints, which generally fall into three broad areas. “It’s either the sales practices — where the reps are too rough on them — or it’s workmanship, or it’s a contract issue, where the customer thought he was getting 12 windows, but only got 10.”
Kim Hanke, of Hanke Brothers Siding & Windows, the largest home improvement company in Arkansas, has sat on the board of directors of the Arkansas Better Business Bureau for the past five years. When home improvement companies come before the board, he says, which they do at every quarterly meeting, it’s generally for one reason: “A less-than-quality job and no service after the sale.”
Bob Dillon, president of Unique Window & Door, in Indianapolis, says that the industry’s reputation is “better than it was when I got into the business 25 years ago. But it’s still generally negative.” For Dillon, whose company has won ethics awards from the local Better Business Bureau for 3 years running, the most direct impact of that image has to do with his ability to hire quality people. “I have a brand new salesperson who just graduated from Indiana University,” he says. “The biggest negative to him is the image of the industry. And he brought it up. It’s something every salesman deals with on every sales call.” Dillon’s response? “I told him: ‘I cannot control the industry.’”
Many company owners feel that although they can do little or nothing about the way the public perceives the industry, they can do a great deal about the way their own company is perceived. Why is the industry so riddled with unethical practices and complaints? There are many reasons, including the way homeowners buy home improvement projects and the expectations they bring to that transaction. But the biggest reason, according to Hanke, is simple: “It’s easy to get into the business,” he observes, “and it’s easy to get out.”
Why It Matters Ethics, as companies of all kinds have discovered, is not a public relations platitude but a sound policy for managing both a business and its image. A strong ethics program can boost employee morale, build customer loyalty, make you less vulnerable to lawsuits and bad publicity, spare you costly fines, and contribute to your bottom line. A 1998 study by public relations company Burson-Marsteller reported that a CEO’s ethical reputation helped a company attract people and capital and earned it the benefit of the doubt in times of crisis.
Home improvement companies are not oblivious to the issue. Some have incorporated a written ethics policy into their employee manual and presentation book. Champion Windows, the industry’s largest company, devotes an entire section of the sales training conducted at Champion University in Cincinnati to ethics, using the ethics code formulated by the National Association for the Remodeling Industry (NARI).
Many companies have countered the industry’s black eye by becoming involved in charitable work. At NewPro Windows in Woburn, Mass., employees can contribute to a trust — 70% opt to, using payroll deduction — and nominate charities to which the trust will make donations. Mid-Atlantic Waterproofing, a five-branch operation headquartered in Laurel, Md., contributed $50 from every job to raise $45,500 for tsunami relief efforts in South Asia, a fact the company calls attention to in its presentation book and on its Web site. “We’re trying to promote our company’s goodwill,” says general manager John Bryant. “Not a lot in our industry do it, so it’s a way to separate ourselves.” For the 18th year in a row, Schmidt Siding & Window Co. in Mankato, Minn., raised money — last year $10,000 —for the Make-A-Wish Foundation by building a playhouse and raffling it off at a local mall.
Many have learned the value of joining organizations such as the Photos: Compoa Better Business Bureau, which makes them voluntarily accountable to customers for unresolved complaints. In 2004, for instance, Champion Windows won the Torch Award for Marketplace Ethics given to companies with 500-plus employees by the Cincinnati-area BBB. “At Champion, we’re always battling that guilt-by-association,” vice president Don Jones says.
Drawing the Line on Ethics Experts such as Dr. Bruce Weinstein, an ethicist and frequent CNN commentator, contend that organizational ethics begin with the person at the top. “The only way is to walk the talk,” he says. “When the owner puts it into practice, clients notice.”
Few would dispute that. Hanke, who co-founded his company with his brother Rex 25 years ago, says that many home improvement company owners surround themselves with unethical people. “Obviously,” he says, “it starts with character, or the lack of it.”
So what are the ethical issues for honest companies in the home improvement industry? They range across the board, from service calls to installer courtesy in the home. Many have to do with simply telling the truth. “I remind my people at least once a month to surprise the customer,” says Bill Conforti, owner of Siding 1/Windows 1 in Chicago. “If we have a four-week backlog, don’t tell them it’s two weeks. Don’t tell them what they want to hear. Tell them the truth.”
That can be easier said than done in a business where opportunities for profitably stretching the truth are plentiful.
Start with the price of a job. Should salespeople sell on par —where they’re paid on a share of profitability? Many companies embrace that method, including some of the most reputable. They do so to keep their salespeople and to cover overhead. But many that do have narrowed the range of what a salesperson can charge or keep.
“It is unwise and unfair, but common within the industry,” says Dave Yoho, a well-known industry consultant, and REPLACEMENT CONTRACTOR columnist. “Why is it fair to charge one person one price, and to then charge a different price for someone else down the street, for the same job?”
Suppose you have a million-dollar seller who routinely promises more than the company can deliver. Do you fire him? Many company owners say they would. “He wouldn’t be here after the first hundred thousand,’ says Paul Panagiotidis, president of Total Home Construction, in Plainview, N.Y.
And how do you handle the subject of competition when it comes up in a sales call? Is it ethical to slam your competitor to get the sale? Does it even work?
“A lot of times when we ask people how they heard about Champion,” Jones says, “[prospects] will say they talked with a rep from another company who ‘spent a lot of time knocking your company, so we figured we’d find out what they were afraid of.’” Many times, Jones points out, customers “want to see how you’ll perform, ethically, in the home” and competitor-bashing makes your ethics suspect. “Consumers don’t appreciate it, and it takes you in a different direction,” he adds.
