Fitzgerald, president of Fitzgerald Contracting of Shreveport, La., and Durr, Durr Mechanical, New York, presented a frank session on the pros and cons of belonging to a peer group. "This process is like standing naked in the shower while 15 of your closest friends critique your every move," said Fitzgerald, who then acknowledged the quote from acclaimed business author Don McKay.

Both Fitzgerald and Durr stressed that the principal of the company must be involved in the peer group. "You can be in the position of pushing a rope," said Durr. "If you're addressing the same issue more than once for a company because the member doesn't have authority to implement change, it's time to ask why."

This question was raised by one attendee: "What if I don't agree with a recommendation, will I be kicked out?" The straight answer from Durr - "Maybe." Durr added on a more conciliatory note that business owners know that implementing new procedures takes time. But, a constant refusal to try new things is usually a sign that peer group membership isn't going to work for some people.

Fitzgerald said, "It's important to weed out weak members very quickly. Some people just don't want to commit the time."

STAGES OF DEVELOPMENT

The instructor duo told the MCAA attendees that there are three stages of peer group development. Stage one could be a few months or a few years. During this phase members are gaining confidence in each other as they prepare to understand each company's operation. In a completely new group, it was suggested that visits be made to all companies before the first audit takes place.

Stage two involves "building the book," a critical process according to Fitzgerald. During this time all operations are documented and processes are standardized. The third and final stage of a peer group's development is the critique, otherwise known as the audit.

The group spent quite a bit of time discussing the audit process that usually takes place onsite. Many contractors are intimidated early on because they often feel they don't have adequate procedures and policies in place. Opening one's business up to "getting drilled" by the group can be daunting.

"Some things in the audit delivery are going to blow you away," said Fitzgerald.

The audits involve many employees in the company who may for the first time be exposed to people they have never met before. Peer groups are aware that this can be a very unsettling feeling for some. Also, some employees will use the opportunity for self-promotion rather than to help the company.

Durr suggested that peer group members must be geographically diverse and non-competing. If not, the opportunity for full disclosure is lost, and that is a key element to creating successful groups.

Publication date: 06/12/2006