No one company has a monopoly on good ideas. Other contracting firms like yours have similar issues, questions, and problems. Peer groups, sometimes also called forum groups, bring together companies usually located in different parts of the country. The companies involved should have non-competing boundaries so that they can meet with one another for the purpose of finding practical and functional solutions to common barriers and problems. The open exchange of confidential information and best practices allow peer group members to become more cost-efficient, better quality oriented, and more profitable.

What exactly is a peer group?

Peer groups usually consist of 6-12 contractors, of similar size and operating in non-competing markets, who meet to discuss matters of business and professional and personal interest. The members are usually all electrical contractors, mechanical contractors, or general contractors, who typically meet two to three times a year, plus additionally for the audit process. One member of the group is chosen to lead the meetings for the upcoming year, and is responsible for coordinating those meetings and audit dates. To get the most benefit from the peer group, it takes hard work and commitment to the process, as the peer group is not a social committee.

Should my company be involved in a peer group?

Well, do you find yourself often working “in the business” rather than “on the business”? And, are you doing the right things, not just doing things right? You may know a number of people who are willing to help you as advisors such as your banker, accountant, attorney, or board members. However, there is nothing equal to having a group of fellow contractors to draw from and learn with, all in the spirit of continuous improvement. The relationships and camaraderie that develops amongst members will alleviate the isolation that comes with being a business owner, and will provide sound advice when needed.

The continuous learning environment

The continuous, non-competitive sharing of best practices and learning environment will enable your company to overcome the challenges of growth and change. Diversity within the group is important because members working in different industries and from different geographical areas with different perspectives and personality types will generate new constructive ideas at an amazing pace. By participating in the group meetings and audit process, members will feel refreshed and acquire new perspectives and different solutions, and devise better business plans.

How it works: The audit process

The success of the peer group begins with the audit process. Prior to the audit date, the hosting company will develop an A-Z manual on how the company conducts business, including all processes and financial information. The process involves each company and cycles every 3-4 years. The company that is receiving the audit will host each of the other members’ personnel by setting up hotel accommodations and meal arrangements during their visit.

The audit process takes 2-3 days, during which the peer group tours the business facilities, interviews employees and reviews their business operation, then develops a report reflecting strengths, weaknesses, and a list of recommendations. After the report is compiled, the peer group members sit down with the owner of the company being audited and present their report. It is expected that the company who just received the audit will take action on the recommendations and report progress back to the group at the next meeting. The peer group should have guidelines stating how recommendations should be followed.

To keep the energy level within the group maximized, once each company has had one or two audits conducted, the company visits change focus from an audit process to a “deep dive” process, in which a certain portion of the business is thoroughly analyzed and best practices are shared. This could be the project management department, design build department, CAD department, service department, etc. These deep dives can be instrumental in streamlining processes within your company.

How it works: The meetings

The group will formally meet two to three times per year to share ideas, to advise one another and to creatively solve problems in a candid, supportive environment. Each company representative will take about 10 minutes to report on the three most significant issues facing their company within the upcoming six months. The company who most recently had an audit performed will additionally report on the progress of the peer group’s recommendations. Some issues will require status reporting at upcoming meetings due to the length of time required to implement certain ideas.

 

What are the benefits?

• Provide the opportunity for contractors to collectively solve problems and not re-invent the wheel.
• Win-win sharing of ideas and best practices.
• Sounding board for ideas or concerns with non-threatening feedback.
• Opportunity to improve your business.
• Serve as a company’s unofficial board of directors, or board of advisors.
• In the event that one of your customers has a project in the area of a peer group member, you now have a local well known company to team with, providing local manpower.
• Usually one of the members has “been there and done that”, which will prevent the same mistakes within your organization.

 

Issues to consider before joining a peer group

• Confidentiality of information shared.
• Non-competing members within the group.
• Time and financial commitment to attend the meetings and audits.
• Management’s commitment to embrace the objectives and goals of the peer group.
• Willingness to expose your company affairs and yourself to peers.
• Peer group main participant should be the principal of the company.

As you can see, peer groups require time and commitment but can be an effective and productive investment in the future of your business.