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MORRISON HOMES

A Commitment to Being the Best

To be recognized as America's Best Builder by your peers, you must deliver many things:
Innovative Home Designs
Quality Construction
Dedicated, Conscientious Employees

...but most of all, you must deliver completely satisfied customers.

At Morrison Homes, we remain dedicated to the goal of being considered the best builder in America - not just by our peers, but by our customers. In fact, in addition to a constant focus on quality materials and workmanship, we rank our staff against the national average in a variety of areas - Timeliness of Home Delivery, Honesty & Integrity, Timeliness and Cleanliness of Warranty Work - these and many more consistently score well above the national averages as reported by J.D. Power & Associates, and we continue to strive for 100% satisfaction from each of our homeowners.
A JUMP START
In his first four years as CEO, Stewart Cline tripled closings to 2,465 units. In the coming four, he plans to crack 5,000. Profits are strong, and the once-ailing Morrison can now boast a return on assets of 15 percent. The transformation of Morrison Homes is quite the success story. But its future was by no means secure when Cline left Ryland Homes in 1994 to head the troubled company. Originally a family business in Northern California, Morrison had been bought by Britain's largest home builder, George Wimpey PLC. Dismayed over its U.S. losses, Wimpey offered Cline virtual carte blanche in rebuilding the operation. The prospect of putting his stamp on the company proved irresistible to the 22-year Ryland veteran. Cline kept the name, but that was about it. He wanted a team with fresh perspectives. In some cases, he went outside the industry -- to find his human resources manager, for example. He brought in an architect to serve as construction vice president and chose a lawyer to head his land acquisition group. "I didn't want the same old, same old," says Cline. "I wanted people who could bring some 'what ifs' to our group, people who could look outside the box."

BRANCHING OUT
Surveying what was then an 800-unit-a-year behemoth, Cline found a company unclear about its mission, core product, and target market. It wouldn't be for long. Cline envisioned a multi-market operation with emphasis on the Sun Belt. In short order, he expanded Florida operations and opened offices in Houston and Austin (and later in Phoenix, Dallas, and San Antonio). He shut down divisions in Southern California, citing the expense of doing business there. "We'll take the lesser return for the lower risk," says Cline, explaining the company's conservative stance. "We could open three other cities with those assets." Assets were a critical issue for Morrison in 1994. While Wimpey didn't expect to make money from the company, it wasn't going to contribute any, either. The agreement was that Morrison had to fund its operations by selling off a substantial portfolio of non-performing assets. It took Cline's management team two years to pull the company into the black. There are still two properties to be liquidated. With its profitability re-established and new systems in place, Morrison's five-year plan calls for entering four new markets in the next two years. Carolina markets are a possibility, and Morrison is eyeing a potential acquisition in Denver.

THE COLOR PURPLE
Consistent with his goal of building a national company, Cline has emphasized a strong brand. Some functions he leaves to the divisions, including advertising, model merchandising, and Realtor programs. But those affecting the overall image -- what he calls franchise issues -- he keeps in Alpharetta. Why? Though every community starts out with the same information, every salesperson modifies and personalizes the message, diluting it over time, he says. So, marketing pieces such as signage, logo usage, sales office design, and collateral pieces are designed centrally. The company's trademark purple contributes to consistency. Newly hired salespeople all get the same message when they attend a five-day, corporate-run boot camp. Cline is puzzled at the willingness of some large builders to allow separate identities to develop at the local level. A national brand, he believes, will provide an essential edge in selling via the Internet and other new technologies. Indeed, five times as many visitors come to Morrison's Web site as to its model home communities.

RAVING FANS
If stellar service is not equal in priority to robust financials at Morrison, then it runs a close second. Cline's mission is to deliver service so remarkable that customers rave about it. His goal for the next two years is to achieve a 90 percent positive customer satisfaction rating and a referral rate of 30 percent. "Creating a more enjoyable process for the buyer was at the top of the list when I came on board," says Cline. "There were opportunities to do a better job of interacting with the customer. Nobody else had really stepped up to that." One of his first moves as CEO was to double the typical one-year warranty period to two years. He did so against the advice of his managers, who worried about the cost. But a good builder does that in practice anyway, he reasoned. Why not get credit for it in the marketplace?

Having Wimpey's blessing to create the company from scratch made it easier to orient the organization to the theme of customer service. "It's difficult to change the culture in an existing business," says Cline. "This was a great opportunity as a new business to create that culture." From the start, the company evaluated prospective hires in terms of customer orientation. In choosing managers, Cline even passed up old friends who, he knew, still viewed customers in an adversarial way. Morrison employees hear a lot about commitment to the customer. It begins with the orientation video for new hires and is reinforced with an annual refresher course for all employees. Within each division, a rep is designated to take calls, faxes, or e-mails from customers and to route them appropriately. All 450 Morrison employees have read the 1993 book about customer service, Raving Fans, by Ken Blanchard and Sheldon Bowles. It's not surprising that up to 5 percent of each employee's base salary is tied to customer satisfaction ratings. A return-on-asset component also figures into the compensation of higher-level employees.

SEAMLESS SERVICE
Morrison's customer service process entails a series of six meetings between builder and buyer, lists of action items, and postcards informing customers when foundation, framing, and drywall have been completed. A manual the company calls "the little purple book" guides buyers from the building process through their 10-year structural warranty. But in its quest for raving fans, the company has also embarked on a more aggressive initiative. "We are working to build a system that will be more responsive to customers who want more non-standard options," says Cline. "We need to be willing to pull the chain to stop production if necessary." The program, dubbed Seamless Service, is meant to identify and close the gaps that add time and frustration to the process. While most of the industry struggles to shorten the time from start to close, Seamless Service aims to reduce the cycle time from sale to start of construction. Customers' increasing demands, Cline says, have made the early stages of building more complicated and more prone to trouble. This period of time is the turning point in the communication with the customer. This quarter, Morrison will complete its year-long process of creating division-specific flow charts that map each step of the process. The contract approval chart, for example, lays out on a single page each decision point from sales associate to sales manager to sales administrator to controller. Part two of the initiative addresses how to handle customer complaints in a way that ensures management actions are consistent with company policy. Cline himself refuses to handle complaints that come to him directly from customers. Other managers are instructed to do the same, so as not to undermine the authority of line employees. When an employee has erred, he or she is allowed to save face by contacting the customer and handling the resolution, rather than having a supervisor step in. "Our attitude about employees makes it easy for us to recruit," Cline points out. That attitude is by design. Cline wants an employee team that is second to none, the envy of the industry. Careful hiring gives him the comfort level to allow team management. Three regional vice presidents along with Cline and his staff of five meet monthly to discuss issues and decisions, such as national partnerships. A document summarizing the meeting goes to division presidents. The same team signs off on all land deals. By keeping the team lean and by packaging each deal in a uniform format, decisions get made pretty quickly, Cline says. The inclusive process minimizes in-fighting, he adds, and makes it easier for managers to embrace policies than if he simply dictated decisions. "Everybody up here is to serve the divisions, and that's how we manage," he says. "The divisions are the ones that make the money. They sell, build, and service the homes. If anybody in corporate becomes anything but a resource, then it's time to make a change."

DOWNTURN COMING?
Ever mindful of a possible downturn, Cline maintains a three-year land supply, a third of which the company will develop. He has kept the proportion of Morrison communities located within master planned communities to 40 percent. He believes that, in those communities, home values and sales absorptions have traditionally fared better in a slow market. Most important, Cline feels strongly that when the market cools -- an eventuality he anticipates this year -- Morrison's loyal customers, its raving fans, through referrals and their own re-purchases, will buoy the business.

*This article has been reprinted from the January 2000 edition of Builder Magazine.