November 12, 2024 • 42 mins
In this episode of the FMI Built-In podcast, host Scott Winstead is joined by Les Hiscoe, CEO of Shawmut Design and Construction. Shawmut is 100% ESOP-owned and has made Fortune’s best workplace list 16 times during Les’ tenure as CEO.
Les talks about Shawmut’s shift to a more sustainable business model, touching on navigating change, strategic leadership, company culture and talent retention.
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Transcript
Episode Transcript
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(00:00):
Hello and welcome. I'm Scott Winstead, FMI Consulting President.
(00:06):
I'm really excited to share my conversation with Les Hisco with you.
Les is the CEO of Shawmit Design and Construction, a $2 billion year national construction management firm with 11 offices nationwide.
Since becoming CEO in 2015, Les has led Shawmit through tremendous growth, expanding into new sectors and growing market share in New York, Los Angeles, and Miami.
Shawmit is well known for its unwavering focus on the client experience and on cultivating and nurturing top talent internally, having been recognized as a fortune-best workplace and amazing 16 times during Les' 10-year as CEO.
(00:39):
In addition to his role as CEO, Les is deeply involved in the construction industry and in giving back to his local community.
He currently serves on the board of the Construction Industry Roundtable, is a member of the Corporation at Perkins School for the Blind, and is a trustee at Roger Williams University.
He is also an active member of Rebuilding Together New York City, where he's been honored as a board member of the year, and is an active and contributing member of the ACE Mentor Program of America.
(01:06):
Additionally, he has been recognized for his industry leadership by a number of organizations including Crane's New York Business, the LA Times, and the National Safety Council.
Our conversation covers a wide range of topics, focusing on Shawmit's recent business model pivot and the key strategies Les has employed to successfully lead the company through this transition.
Please enjoy Les Hisco.
(01:27):
Good morning Scott, it's a pleasure. Nice to chat with you again.
Well, I'd love to just start off with, if you would, just sharing a thumbnail of Shawmit today.
You know, it's interesting. Shawmit today, we're a few months left to go in the year. Looks like we're going to cross the $2 billion barrier for the first time in our history.
So really excited about that in the middle of having a great year.
(01:49):
We're actually using the term, the kind of the Shawmit of today, when we talk about kind of this overall topic is our pivot and kind of Shawmit today is kind of all the good things of the Shawmit of the past, but with a bigger, more enhanced, more robust strategy around project capabilities, project sizes, and offerings in our markets.
(02:13):
Given the conversation that we're going to have around the pivot that you guys have gone through over the last several years, I'd love you to kind of rewind the clock a little bit and talk about if I would ask you the question five years ago, describe the thumbnail of Shawmit five years ago.
What's the before and after look like?
Sure. So we're 40 year old company. We went 100% ESA in 2005. So we're now almost 20 years as a as a mature 100% on ESA. And, you know, the company was really founded on doing kind of fast moving, complex projects.
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And in our early days, those tended to be kind of really small, quick hit projects and we're doing them for hospitality folks, retail folks, we're doing them at, you know, a lot of the prestigious universities in Boston kind of summer, quick hits and all those things.
We're trying to bring a level sophistication and speed and nimbleness to these really fast projects. So as the model grew. And it's really interesting when I look back and do strategic things.
(03:19):
And I look back at the kind of segments of time. So I've been the CEO of the company now for the last 10 years and I was the CEO for two or three weeks for that.
So right after the great recession. And, you know, we had this period of working up until the great recession where we were sector based, purely, purely sector based, and then growing nationally.
And really that was one of my roles as I was running the retail national businesses. You know, I opened the LA office, I opened the Miami office, I opened the New York office. And so I was out kind of doing that while kind of in New England and Boston, the company and New York company was growing.
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And there was a lot of people who were doing that. And I was like, I'm going to be in more education, things like that. The rest of the country was really hospitality retail and occasionally another type of project. So great recession takes, you know, a little bit of a toll and we come out of it.
And in 2019, really growing that sector based model, we had offices in places but the PNLs for the business units were sector based. So we had an education PNL, we had a retail PNL, we had hospitality PNL.
(04:25):
And sometime around, I'd say it was maybe 2017 ish 2018 ish. I'm in our LA office. And there is our VP of retail is there. And he lives in he lived in New York and our VP of hospitality is there and he lived in Boston and they each had with them a director of construction
(04:47):
operations for each of the business units. I have these four executives in Los Angeles and myself, everybody traveling to kind of check in on a few clients and projects and it really kind of started to hit me at that time that this is just this model as its scales is becoming inefficient and becoming unsustainable.
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And then we grew up until 2019 grew, grew, grew to the point where in 2019 we completed 600 projects in 2019. And what was happening, you know, as we did that many projects is we were having to put in more and more layers of oversight.
(05:29):
We had people traveling at folks and when we were sector based and client based and so I had folks traveling from the east to the west to do a project and folks traveling from the west to the east to do a project.
And had so many moving parts that we were putting in more construction operations directors more projects executives for tenants and so the overhead started to grow.
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And as you recall that period of time in 2010 2019 we used to call it the marginless recovery. And so right. And so that pressure on overhead with that tightness on margin kind of made that model start to become unsustainable for us.
So there was a point 17 that I then said we've really got to change this business model so we've embarked on that work, really and probably the 2017 18 period maybe more 18, and essentially settled on a matrix structure because I didn't want to lose the brand equity maybe that we built up over all these
(06:25):
years of tons of sector based experts and tons of client favorites if you will and client Zach's and for client product managers and supers.
I didn't want to lose all that. And so the matrix was really, we want to run the PNL's through the regions now. So we want really strong regions, but I don't want to lose the sector expertise and the client and all the client relationships that our people had.
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And so essentially we're a matrix today. So then we pilot the matrix in the early parts of 2019. And we fully roll out the matrix in December 1 of 2019 and then you know what happened three and a half months later.
And a matrix operating model is a more expensive model because we were we put in the kind of top line PNL. So my leadership team was kind of top line PNL folks are now going to run regions and sector national sector leads are going to be the expertise across the whole country for us.
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And we've got 11 offices across the country from LA and Boston to Miami and so on. And they had to share revenue goals. And they had to share profit goals and they had to share growth goals. Right.
And so I took our executive vice presidents and put three on the top of the matrix and three on the side of the matrix and said, you're all equal.
But you own the people and you don't. And so then we had to launch in all this work of we did many, many, many, many, many, many, many sessions, racy work, you know, they've had decision accountability.
(08:03):
So responsible accountable, consulted informed, I guess we went through that on how we're going to share goals and how we're going to do all that stuff.
So you end up with we had we ended up with, for instance, you take education, you know, a West Coast leader, a national education head, a national retail head, a national hospitality head, a national life science head.
(08:24):
And then within each region, the local head of each of those things. And so you can see how that becomes a fairly expensive model, but a model to me that is set up for unlimited growth.
And that was the idea. COVID hits. COVID certainly pressured us for sure we had 150 ish 149 active projects around the country at that time.
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So we've really gotten the model down from 600 to a lot less as we started into this model of much larger project sizes.
And 87 of our projects shut down when COVID hit. So we essentially dismantled the matrix temporarily.
I'm happy to report this year across the $2 billion barrier, the matrix is mostly back in place. And I think that can place actually in a better way, a little more of an efficient and effective way.
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So that's where we are. Sean would say the matrix organization doing much, much larger projects than we ever did in about a quarter of the projects that we ever did.
But at we're at double the revenue size. And then, you know, the show and the best year sector based and a lot more small projects.
That's quite an amazing transition over a relatively short amount of time, you know, and an awful lot of change management goes into making these things.
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They don't just happen as you cross the $2 billion threshold, roughly how many projects do you think you guys will end up finishing?
It's interesting. And there's more to the answer than just the number. It's about 200 probably projects this year.
It may be a little more than 200. But, you know, back then when we did 600, we had some large projects, you know, we had a couple of hundred million dollar projects.
(10:04):
We had a number of 30s and 40s and things like that. But we also then had hundreds and hundreds and hundreds of 2 million, 5 million, 7 million going around the country.
And so we were, you know, sector based and historically we were a small projects company. Think of it that way.
(10:26):
And then you think of like some of our competitors that are that are, you know, written large size. They would have, you know, they were large project companies and they all had small projects divisions.
So to make the change, we said, we're a small projects company that has to create a large project division.
And back then that we knew what we were ultimately going to do is create the large project division, the large project division becomes the mainstay of the company. And then we become a large projects company.
(10:54):
And then we created a small projects division and we're actually in the middle of all that right now.
And the challenge and COVID in a way was was an opportunity for us.
You can shed the small projects in a day. You can shed small projects. And so we had, we had put out a bunch of different kind of goals.
One was double our average project size. And we had some return on staff metrics and we cut the number of projects in half and all these things.
(11:23):
You can shed the small ones really fast, but you don't win the big ones very fast. You know, the big ones take you, you know, a year to chase and then a year of precon and then maybe a star.
So we were thoughtful about this kind of, you know, intersecting line of revenue going down and COVID kind of killed a lot of the small projects in retail hospitality for us.
(11:45):
So we really didn't have that choice. So COVID actually really made us accelerate the work and we kind of leaned into that and said, we're going to accelerate this large project work.
And so, but going back to the question of kind of stakeholder management, the, we had multiple ball day offsites with my leadership team because on my leadership team, people's jobs were changing.
(12:10):
Right. Someone who used to own a sector and had the people in the P and L now has no people and no P and L, but they're still an executive vice president. They still have my responsibility.
As you talk in less, what the first thing that came to mind is, you know, it's a cliche for reason, but never let a crisis go to waste.
So COVID was obviously a big catalyst. And it's interesting, your thoughts around large project companies, then building smaller special projects divisions, depending on the sector you're participating in, those small projects are a great way to say sticky with clients and get in really closely to be able to be positioned for the large projects.
(12:47):
So you got both ends to the middle, right?
The small projects got a great training ground for young folks to take more responsibility on a kind of full project scope. You're right. A new client very often doesn't want to try it out on one of their biggest projects, right?
So you got to get in, you got to show them who you are. And so it is interesting as we went to large project, we were so extremely focused on building our large project capability.
(13:11):
And I'm happy to say today we've got, we've got an almost $700 million project going, $3 over $500 million going. We've got, we just turned over our first $350 million project.
And so the mix is really great.
Eventually I want to get to this mix of we have enough large projects that I have ballast in three years of backlog, in enough small to mid-sized projects that can be a little bit better margin that I have this kind of ideal mix of projects.
(13:40):
And we talk about our sustainability as a company and I talk about diversification in three ways.
Geographic, I want to have geographic diversification across the country to weather any kind of regional storm. I want to have project size diversity and then we want to have sector diversity.
And the matrix allowed us to kind of bring sectors that we didn't have into other regions like education to the West, education to the South, etc.
(14:04):
Talk about that less in the matrix and where you are and where you want to take it. What comes to mind for me is just the idea of stakeholder management.
And if you would share the process that you went through to bring those stakeholders along, whether it's employees, whether it's subcontractor partners, design partners, owners.
Yeah, it started with a lot of time, a lot of kind of off sites with my leader team and bring first bringing them along to agree that the matrix was the right structure for us.
(14:35):
Bringing them along to agree that why matrix and why not pure regional, right? And so we brought them along to to where we all agreed in the room that this is absolutely the right growth structure for the future.
And then we had a pretty robust communication plan and roll out plan and stakeholder management plan or change management plan.
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And our old sector based model.
We had a whole lot of people sitting in the East that were working on national projects that had to get absorbed into a regional P and L and so I was pretty adamant that no one's going home.
No one's going home in this reorg. So if you're.
A project manager or superintendent who can only do smaller retail jobs and use it in Boston.
(15:25):
And we're going to go to this large project model.
There's a timeline of, I don't want to lose all small projects. And it's going to take some time. So I had some some ability to upscale and train really talented folks that were in the company to get them ready for large projects.
So we put them on projects as kind of the second project manager and the second superintendent and we loaded up our projects with people to get them upskilled.
(15:50):
We also had a real plan to fire large project builders. We needed more outside large project project executives, project superintendents, managers, project estimators.
So kind of putting that out to the company and here's what the matrix is all about. You know, I did just a ton of communication.
We had a lot of town halls with the company. We went through all that racy work. And those were kind of in the regions with regional leadership teams, and their people and then, you know, going through here's what your job looks like and for the project manager and superintendent
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and their job really didn't change if this overall business model changes, but we had to make them feel comfortable that it changed, changed the scary for folks. And so tons and tons and tons of communications via email via town hall via sessions that we brought them into talk.
Now all the classic things that change management.
Probably have a whole separate podcast episode on change management and the process you all went through tying it back to the employees and the people that you have on the team. You know, you mentioned that you guys went to ESOP in 2005 so nearly 20 years as an ESOP very mature
(16:58):
ESOPs tend to be in vogue right now. You guys have been at it for a long, long time. If you would talk about how has that employee ownership model influenced the company's culture and performance over time.
You know, I think in ESOP culture, we really do talk about you're an owner, right, there's no individual owner who is making the process of the company, right, there's the process of the company over time, ultimately go to all of you to all of the employees.
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And we're very transparent about it. I have an annual shareholders meeting every year we do ESOP information seminars for all new employees that come on. And I think culturally, we talk about the mindset of, you know, if you're a small business owner and you have a client and that client
loves you and gives you repeat business, they want to deal with that owner of the business that owner of the business kind of thinks longer term doesn't think transactionally thinks about how do I keep this client or customer forever.
(18:04):
They'll make financial decisions. They'll make business decisions in the interest of client service and we've always been our differentiator as a firm has always been, we want to be the client service offering out there in the marketplace.
Of course, we have to be highly technical builders, we have to be great builders, we have to build on time on budget by quality. And our differentiator that was our client service kind of model. And so we really lean into it and say, we train on on CX customer service customer experience we have terms that we use like
(18:39):
deliver a 10 on a scale of one to 10, the ride we want the ride to be smoother for client and couple that with an ESOP culture where your people feel empowered because their impact directly affects the profitability of the company which directly then pays them over time.
And so that culture works so we really stress that ownership culture that kind of accountability culture that you have real responsibility. Now we're a big organization so we certainly have our process and our rule on our control rates and risk management all the same.
(19:11):
But the culture works. We recently just had every two years we do a big formal employee engagement survey. You know, we do the best place to work things every year and we get great feedback from that as well but the kind of more formalized employee engagement survey that we do every two years.
Same questions were on our fourth iteration of that over the last eight years now. So we can measure our improvement over time. We just got we just got it back and we got just phenomenal engagement scores and just was almost surprised by how good they were and and and really really happy and they kind of measure against a couple of benchmarks but
(19:52):
you know one of the items was so overall engagement score was an 89 which was just this incredibly high engagement score. But the one measure and actually wrote it down I got I'm just going to refer to it so the question was are you motivated to go above and beyond for the company.
And we ranked 17 points higher than the global average on that one thing alone and you know our industry industry is tough and it takes discretionary effort and it takes going above and beyond and these are measures of our culture and then and there's certainly feedback in there too like people were very happy about our
(20:28):
development planning and they want more people love that we have a robust process and they don't love so much that we have a robust process right.
So right. So long as it applies to everybody else right.
Right. So we we take the data really really seriously. We take it in parts and put it out to the region so the regions can do work on improvements. I share the data. The kind of great stuff and the development stuff for us with the company so I think transparency is a huge part of
(21:01):
the subculture. We have some folks that join us from other firms that say wow our firm never once shared with us a revenue goal for the year or what kind of possibility we made and we share all those things. So we're just very very transparent as an
getting back to the
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to a region and then kind of grow around them.
But again, organically, we've made a handful of smaller,
kind of tuck-in acquisitions in the past,
I think where we are today,
and we do, as far as growth philosophy,
I'm very much a growth-driven leader.
I think if you're not growing, you're shrinking and dying.
(22:07):
And we have this incredible college training program
where we bring in 30 to 50 people a year.
And I actually have created a chart with my team
that shows, okay, after X amount of years,
we have this many new project managers
and project superintendents coming online.
Where are we gonna put up?
One, we wanna keep all our great people,
(22:28):
and then we need to create room
for all these people to have opportunity.
You can actually reduce that to a number
that you need to grow.
So we kind of set a 10% growth target per year.
And I think now, the bigger you get,
that's harder to do organically.
I do think we have tons of runway
on the large project fronts
now that we have that capability.
(22:49):
And that capability is more mature in some regions for us
and less mature in others.
And so we need to just grow there.
So I see acquisition as a bigger part of our next 10 years.
You talked about one of the reasons for growth
and advocating for growth is just obviously
it creates opportunity for others in the business.
(23:09):
And if you don't have that,
then you don't have great talent.
And so my next question,
I wanna tie it back to just talent.
I mean, you don't make Fortune's best workplace 16 times
without a great talent strategy
and really taking care of people.
What does the talent development program
look like at Shalmit today?
Timing is great for that question this week.
I'm just coming back from a two day offsite
(23:33):
with 25 folks that have been in a leadership development
program for the last 18 months for us.
And the last two days was the culmination
of that leadership development program.
And everybody together,
we flew them all in from around the country,
did a great session.
They all, the culmination of the program
is them to present their action learning projects to us,
(23:55):
which are kind of real company issues to solve.
And what's kind of amazing is the issues
that are chosen or issues we've been,
we and every one of my peers that run consortia
we're all dealing with the same issues.
And to hear these folks with new ideas and fresh energy
and kind of more modern ways of thinking
about how to solve these problems was really exciting.
(24:16):
So we run leadership development programs.
So I think probably seven or so years ago,
I've hired a chief people officer
and she's phenomenal, Mary Ann Monti.
And she reports directly to me
and I've elevated talent to the highest level.
To really say talent is what we have, right?
We don't own equipment and we don't own buildings.
(24:39):
We have talent, right?
That's what we have, that's our resource.
And so a lot of work along the way,
we kind of annually, we went to focal point
once a year reviews, but then we spread talent
both in the spring we'll do,
we've separated kind of the incentive piece
from the development piece.
So in March, you get your review,
(24:59):
which talks all about development.
And then in September, you get the financial component of that
and have another conversation about that.
But then all these touch points,
we put in a platform called Shama U.
And it's interesting for years,
we had something called Shama U,
the letter U like university.
And it was a pretty standard curriculum based training
platform, minimum requirements, you take these classes.
(25:21):
And now it's actually her platform is called Shama U YOU.
So Shama U, you own your development.
I'm really proud of our kind of diversity numbers
at the company.
And we're 30% or 31% women in the industry
that's an average of 10, wow, we were 11% people of color
in an industry that's an average of three.
(25:43):
And so I'm really happy with the numbers,
but our people said, we feel like we belong here.
So belonging is really high.
They said, but I don't know if we feel like
we have the same opportunities.
We've created a law of work around that.
We run this program called sponsorship,
which every one of my team, my executive leadership team,
(26:05):
we call the ELT.
We all have a sponsor.
And our job very different from management coaching,
mentoring, sponsoring is the true champion of people.
And so we've got 30 or 40 people in that program right now
that have sponsors.
I'm in the process right now.
So my COO, my chief people officer and me,
(26:25):
we took 10 each of these folks
and we're doing check-ins with them.
I got on a call the other day, a couple of days ago,
they wanted to say, how sponsorship work for you?
And is it clear that sponsorship is different
from coaching or mentorship to you?
And she said, very, very clear.
And she goes, I've been promoted twice
since I've been in the program for a year.
So I feel like it's working for me.
(26:46):
And like, great.
And then I ask them, do you have access
to the leader of your group or function?
Do you feel like you're getting pushed on opportunities
that people know who you are enough to propose you
on a stretch or opportunity?
And I'm here in great feedback.
It's the third iteration of the sponsorship program we run.
So we do that.
We do have a mentorship software where that pairs people
(27:09):
to kind of try to eliminate some bias from the system.
How will people fit best together as MentorMNT?
We have a mentorship program.
We do a ton of training, development around
how to be a good manager, how to be a good leader,
how to have good conversations, all those things.
So, yeah, there's a lot, a lot, a lot there.
And we do value talent as really all we got.
(27:29):
A great explanation, less of the investment,
not just in dollars, but in time and executive time
and leadership's time in people and in the talent.
And it's so many things that you touched on.
Two follow-up questions, one of which
around the sponsorship program, how did you first come up
with identifying and picking sponsors?
(27:50):
Great question.
So we run an annual talent review process.
And it's not an unusual process.
It's a nine box process, potential and performance.
So every region goes through their people.
We talk about where they kind of fall
and in our kind of talent matrix, if you will.
(28:11):
And we then, you get your top right box,
which is really high potential and really high performance.
Those are your absolute all stars.
And then you kind of lay or overlay.
And really the sponsorship program is really for,
I'd say our underserved population, if you will,
who are the folks that need more championing?
(28:34):
Who are the folks that need that?
And it's pretty easy to create that list.
And so as we've done it, at first it was only the 10 of us
on the ELT that had sponsors.
And what I'll call sponsorship 1.0.
Sponsorship 2.0, we expanded it.
We gave a couple of us two sponsors.
And then sponsorship 3.0,
(28:56):
we went down into the SLTE to get 20, 25 more sponsors
so that we could expand the program
and actually do more with folks.
And so we're super proud of it.
Our people love it.
These check-ins are new, the ones I'm doing
over the last maybe month I've been doing them.
I think I've done about five.
(29:16):
They're wonderful conversations and they're folks that,
I don't really know that personally.
So I get on this call and like, first of all,
how's sponsorship working for you?
How's your sponsor?
Are they making time for you?
And when they make time for you,
do you feel like it's a different time
than you get anywhere else?
And the answers have been yes.
And so we had to coach all the sponsors
(29:37):
on how to be a sponsor.
So there's some training required there.
I was just, and I got to know these folks on the call
going like, hey, I got promoted two times.
Or yeah, no, I'm one female superintendent.
Just finished a very successful turnover
of a $100 million K through 12 school.
And I had my call over a couple of days ago and she said,
(29:58):
I just got named on my own.
She was the number two on that 100-year-old school.
I just got named on my own ground up school.
And I'm nervous, but my sponsor feels like I'm ready
and put me forward and I'm gonna go do it.
Those are the examples that make you feel good.
You mentioned the Action Learning Program
that's part of your development model
and high potential model.
(30:19):
We are big fans of that approach and that philosophy.
We do it a lot with our leadership development work.
It's one thing to have a team go off
and identify a problem and make recommendations.
It's another that's, okay, now how are you going to bring
about this change in the company?
The problem identification and recommendations
is the easy part.
How do you make it stick and make it systemic
(30:41):
is the challenge, hence the leadership development
opportunity.
Exactly.
And we're very over about that.
And I closed out the session yesterday
and we had six groups, so six topics.
And from risk to customer service
to kind of proper levels of support staff
(31:02):
to how do we differentiate in pre-construction
to sort of tackling big media issues.
So in the course of the Action Learning Project,
they had to engage multiple stakeholders
from all over the business.
So there's this awareness thing.
So by closing thoughts, I said, folks, remember,
first of all, I think they all did a great job.
Some groups kind of more clear and concise with,
(31:24):
this is what we got to go do.
Some a little less clear and concise
because it's complicated, right?
We have other teams working on pre-construction initiatives
in two or three places in the company
and how this group gets assigned it.
And they have to work with all those teams
and then someone's got to reduce the scope
so we're not boiling the ocean and to get something done.
(31:45):
We made them all follow a change management model
called, I think it was called ADCAR to present to us.
And we'll have solid meetings with them,
but I did remind them that a huge part
of the Action Learning Project is what you went through.
The next part is what you're gonna go through
and having to kind of create your team,
(32:06):
having to create a charter, having to tackle the issue,
how to then reduce the issue.
And one team came in with an issue
and this was maybe six or eight months ago.
Kind of round one of their presentation with their charter.
And as an ELT, we thought they missed the mark on the charter.
And so we gave them feedback.
(32:26):
When they presented to us two days ago, they said,
so here's our new presentation
and we felt like our last one was met with some hostility.
That's how they opened their session.
And anyway, and they did a phenomenal job of not,
and they didn't abandon their other thing.
They kind of addressed it.
They have some advice there and they pivoted
(32:47):
to use that word, it's a phenomenal job.
And so I think that alone is a huge learning.
Just to transition a little bit less,
10 years roughly in the role that you're in now,
having been a lot of time prior to that
in leadership positions, executive positions.
I'm curious as to how would you describe the role
that you stepped into versus what you thought
(33:08):
you were stepping into 10 years ago?
You know, it's interesting.
Our former CEO, who was a real mentor to me,
he said to me one time,
so I was the CEO for 10 and I was the CEO for three.
So go back about 13 years.
And I was 13 years younger than maybe a little more brash.
(33:28):
He kind of said to me at one point
when I was maybe a little too anxious,
he said, be careful what you wish for.
You might not like the job when you get there, right?
And it stuck with me all this time.
And I really liked the job.
And I'll tell you, leading through COVID
was really difficult for us.
(33:49):
And in hindsight, I'm very proud.
We took a people-first-at-all-times approach during COVID.
Keep your people safe, issue, keep them engaged,
keep the culture intact as you have this kind of
really remote workforce for a period of time.
And by the way, we're completely changing
(34:10):
the business model, right?
So those were hard years where the word I'm using
is now we have traction in that business model pivot,
is we have traction in all our regions.
It's a lot more fun.
During COVID, as a leadership team,
you almost have to play down a level
and worry about collecting money
and worrying about accelerating schedules
(34:32):
and projects that cut delayed.
And you really almost play down a level
when you're managing through a crisis.
Now, back up a level, looking at the next 10 years,
in your growth plan, working on some acquisition now,
the continuation of the strategy,
bringing leadership development programs are back,
all those things, it's much, much more fun.
(34:53):
I've learned a lot along the way of surrounding myself
with really talented people, freeze me up to do the things
the business I think needs the most from me,
and that's externally facing strategy,
clients, growth, acquisition, things like that.
And I'm able to do all that stuff now,
and I'm a lot more fun than I was a couple of years ago.
(35:16):
Bill Gates has thoughts around compounding.
Most people overestimate what they can get done in a year,
but dramatically underestimate what they can get done in 10.
And so if you just toil away at it, work, work, work, work,
over time, the snowball starts to catch up
and momentum will carry you.
And then to your point, it gets more fun.
It's the grind in the grit and the stick to it-iveness
(35:36):
in the journey to get to that point
where a lot of people decide to step off the ride.
I use the term a lot, and we used it in our executive offsite
this week, prepping for some strategy work.
When we look out at the last five years,
we still need to stay the course of what we're doing right now,
because yes, we have traction, but we're not there yet.
And you're kind of never there.
(35:57):
But we also, we have to be thinking about the next 10 years,
what does Shama look like 10 years from now?
Let's stay this course, and we have to start adding to it now
for things to stick in 10 years.
So that's something I kind of think about and talk about a lot
with our team, and I'm really proud of the leadership team
we have is our ability to talk straight about stay the course
(36:22):
versus change it.
Most companies are not good at stopping doing things,
and we're one of them.
So we talk about what should we stop doing as well.
Yeah, I probably at some point along the way
had the discussion around the net, net zero.
Most policies are replacing something else or fixing something,
and so we got to at least get rid of one if we're going to add one.
(36:43):
You can't just keep filling the bag otherwise,
the bag breaks at some point.
One of our leadership development groups that presented,
the first thing they presented was on SOP
that we created over the last couple of years.
And they put the flowchart on the screen,
and it was really carousel.
And our COO was in the room.
And then they presented a new streamlined SOP
(37:05):
that was like a quarter of the steps.
And they had data on how much we were complying with that SOP,
and we weren't because it was too cumbersome.
And these folks got in the room and had
to present to the COO that his SOP stunk.
And here's the new one.
And he stood up and said, wow, now I know I know it was compliant.
(37:28):
And he just said, and I'm really happy that you have taken
a crack at this, and you've made it significant
for your improvements.
So the conversation just talked about between you and Tom
back in the day.
Be careful what you wish for.
I'm paraphrasing.
I'm curious, knowing what you know now, what advice would you
go back and give yourself back then?
That's a good question.
(37:49):
What advice?
I love the quote you just shared about overestimate one year
and underestimate 10.
And that really hit me just now.
And I would have said to myself, it's
OK to stay the course, be patient staying the course.
I'm a very self-critical person of myself.
And yet don't be so frustrated with the lack of progress
(38:13):
on some of the change that you want to make.
Stay the course, and it will work out.
But it does take more time.
Things take more time.
Change management, we're a strong culture,
and there's so much that's good about that.
But making change in a strong culture
gets even more difficult.
And so early days, I would say get more people to help
(38:38):
versus think you can do it yourself.
Here's a piece of advice that I think I finally
may have learned.
Yeah, it's pretty cool when you can accomplish something
really special and unique.
I've been reminded, I can't remember who,
there's a college football coach, I think,
that was asked about the costs of leadership.
Everybody talks about the attributes and the pluses
(39:00):
and all the platitudes and the accolades.
But he talked about three costs of leadership.
He said, you'll have to make hard decisions that negatively
affect people you care about.
You'll be disliked despite your best attempts
to do the best for the most.
And you'll be misunderstood, but won't always
have the opportunity to defend yourself.
(39:20):
And so just know when you're signing up for a gig like this
or any leadership role, there is a cost component to it.
Which is important to understand, but worth it
if you can kind of get comfortable with it.
Right.
And I agree with all of those.
Those are all real and hard.
This is saying it's lonely at the top.
(39:40):
I mean, I have a really good two or three person
inner circle of leadership here.
And we can talk about everything.
But yeah, you can always publicly
talk about why you did what you did, right?
And especially in tougher times, it's hard.
But yeah, that's interesting.
I liked that.
You've been very gracious with your time.
I have one final question for you,
(40:02):
which is just as you look out over the next five or so years
as an industry, where do you think the industry is five
years from now?
I think five is a pretty short window.
Certainly, the industry is seeing an onslaught
of investment in technology.
If you look at some of the graphs of the investment dollars
that have gone into automating our industry
(40:24):
in the past 50 years versus the last three,
then the amount of data created in the last three, or four,
or five, whatever, it is remarkable.
We're piloting many, many things.
We're playing with AI on many fronts.
There's no big, broad AI solution here,
but it's integrated into so many little things
(40:46):
to make things more efficient.
So I think you're going to see more and more improvement.
The question we ask is, what's going to disrupt our industry?
Like Uber disrupted the taxi industry, right?
I don't see technology doing that.
I see it improving the industry.
I think the really great builders are great communicators.
(41:12):
They're great at laying out a decision.
They're great.
They can go from really high level of laying out the plan
to really low level of the exact correct stainless steel
screw.
I have a really, I can't, that's not going away.
We're using robots to lay out some of our jobs now.
And I'll tell you what, we check the robots lay out.
(41:34):
A human checks the robots lay out.
So we're practicing things like we talk a lot
about lean philosophy.
We are in a number of IPD contracts.
We employ kind of last planner on all our projects.
And those things are all tried to eliminate gaps, constraints,
and get team members to make commitments that they stick to.
(41:57):
How does kind of technological onslaught now help that?
It'll help it.
I think you still have to have those people kind of talking
and willing to say, this is what we'll do.
So five years from now improved, but not radically changed
would be what I would say.
That's probably a good place for us to end the conversation
(42:19):
before I wear out my welcome.
But listen, again, I can't thank you enough.
Really appreciate it.
Always fun to spend time with you.
And thanks again.
Thanks so much.
Thank you for listening.
And please remember to like or subscribe to the podcast
so you don't miss an episode.
Hello and welcome. I'm Scott Winstead, FMI Consulting President.
(00:06):
I'm really excited to share my conversation with Les Hisco with you.
Les is the CEO of Shawmit Design and Construction, a $2 billion year national construction management firm with 11 offices nationwide.
Since becoming CEO in 2015, Les has led Shawmit through tremendous growth, expanding into new sectors and growing market share in New York, Los Angeles, and Miami.
Shawmit is well known for its unwavering focus on the client experience and on cultivating and nurturing top talent internally, having been recognized as a fortune-best workplace and amazing 16 times during Les' 10-year as CEO.
(00:39):
In addition to his role as CEO, Les is deeply involved in the construction industry and in giving back to his local community.
He currently serves on the board of the Construction Industry Roundtable, is a member of the Corporation at Perkins School for the Blind, and is a trustee at Roger Williams University.
He is also an active member of Rebuilding Together New York City, where he's been honored as a board member of the year, and is an active and contributing member of the ACE Mentor Program of America.
(01:06):
Additionally, he has been recognized for his industry leadership by a number of organizations including Crane's New York Business, the LA Times, and the National Safety Council.
Our conversation covers a wide range of topics, focusing on Shawmit's recent business model pivot and the key strategies Les has employed to successfully lead the company through this transition.
Please enjoy Les Hisco.
(01:27):
Good morning Scott, it's a pleasure. Nice to chat with you again.
Well, I'd love to just start off with, if you would, just sharing a thumbnail of Shawmit today.
You know, it's interesting. Shawmit today, we're a few months left to go in the year. Looks like we're going to cross the $2 billion barrier for the first time in our history.
So really excited about that in the middle of having a great year.
(01:49):
We're actually using the term, the kind of the Shawmit of today, when we talk about kind of this overall topic is our pivot and kind of Shawmit today is kind of all the good things of the Shawmit of the past, but with a bigger, more enhanced, more robust strategy around project capabilities, project sizes, and offerings in our markets.
(02:13):
Given the conversation that we're going to have around the pivot that you guys have gone through over the last several years, I'd love you to kind of rewind the clock a little bit and talk about if I would ask you the question five years ago, describe the thumbnail of Shawmit five years ago.
What's the before and after look like?
Sure. So we're 40 year old company. We went 100% ESA in 2005. So we're now almost 20 years as a as a mature 100% on ESA. And, you know, the company was really founded on doing kind of fast moving, complex projects.
(02:52):
And in our early days, those tended to be kind of really small, quick hit projects and we're doing them for hospitality folks, retail folks, we're doing them at, you know, a lot of the prestigious universities in Boston kind of summer, quick hits and all those things.
We're trying to bring a level sophistication and speed and nimbleness to these really fast projects. So as the model grew. And it's really interesting when I look back and do strategic things.
(03:19):
And I look back at the kind of segments of time. So I've been the CEO of the company now for the last 10 years and I was the CEO for two or three weeks for that.
So right after the great recession. And, you know, we had this period of working up until the great recession where we were sector based, purely, purely sector based, and then growing nationally.
And really that was one of my roles as I was running the retail national businesses. You know, I opened the LA office, I opened the Miami office, I opened the New York office. And so I was out kind of doing that while kind of in New England and Boston, the company and New York company was growing.
(03:53):
And there was a lot of people who were doing that. And I was like, I'm going to be in more education, things like that. The rest of the country was really hospitality retail and occasionally another type of project. So great recession takes, you know, a little bit of a toll and we come out of it.
And in 2019, really growing that sector based model, we had offices in places but the PNLs for the business units were sector based. So we had an education PNL, we had a retail PNL, we had hospitality PNL.
(04:25):
And sometime around, I'd say it was maybe 2017 ish 2018 ish. I'm in our LA office. And there is our VP of retail is there. And he lives in he lived in New York and our VP of hospitality is there and he lived in Boston and they each had with them a director of construction
(04:47):
operations for each of the business units. I have these four executives in Los Angeles and myself, everybody traveling to kind of check in on a few clients and projects and it really kind of started to hit me at that time that this is just this model as its scales is becoming inefficient and becoming unsustainable.
(05:08):
And then we grew up until 2019 grew, grew, grew to the point where in 2019 we completed 600 projects in 2019. And what was happening, you know, as we did that many projects is we were having to put in more and more layers of oversight.
(05:29):
We had people traveling at folks and when we were sector based and client based and so I had folks traveling from the east to the west to do a project and folks traveling from the west to the east to do a project.
And had so many moving parts that we were putting in more construction operations directors more projects executives for tenants and so the overhead started to grow.
(05:52):
And as you recall that period of time in 2010 2019 we used to call it the marginless recovery. And so right. And so that pressure on overhead with that tightness on margin kind of made that model start to become unsustainable for us.
So there was a point 17 that I then said we've really got to change this business model so we've embarked on that work, really and probably the 2017 18 period maybe more 18, and essentially settled on a matrix structure because I didn't want to lose the brand equity maybe that we built up over all these
(06:25):
years of tons of sector based experts and tons of client favorites if you will and client Zach's and for client product managers and supers.
I didn't want to lose all that. And so the matrix was really, we want to run the PNL's through the regions now. So we want really strong regions, but I don't want to lose the sector expertise and the client and all the client relationships that our people had.
(06:54):
And so essentially we're a matrix today. So then we pilot the matrix in the early parts of 2019. And we fully roll out the matrix in December 1 of 2019 and then you know what happened three and a half months later.
And a matrix operating model is a more expensive model because we were we put in the kind of top line PNL. So my leadership team was kind of top line PNL folks are now going to run regions and sector national sector leads are going to be the expertise across the whole country for us.
(07:31):
And we've got 11 offices across the country from LA and Boston to Miami and so on. And they had to share revenue goals. And they had to share profit goals and they had to share growth goals. Right.
And so I took our executive vice presidents and put three on the top of the matrix and three on the side of the matrix and said, you're all equal.
But you own the people and you don't. And so then we had to launch in all this work of we did many, many, many, many, many, many, many sessions, racy work, you know, they've had decision accountability.
(08:03):
So responsible accountable, consulted informed, I guess we went through that on how we're going to share goals and how we're going to do all that stuff.
So you end up with we had we ended up with, for instance, you take education, you know, a West Coast leader, a national education head, a national retail head, a national hospitality head, a national life science head.
(08:24):
And then within each region, the local head of each of those things. And so you can see how that becomes a fairly expensive model, but a model to me that is set up for unlimited growth.
And that was the idea. COVID hits. COVID certainly pressured us for sure we had 150 ish 149 active projects around the country at that time.
(08:49):
So we've really gotten the model down from 600 to a lot less as we started into this model of much larger project sizes.
And 87 of our projects shut down when COVID hit. So we essentially dismantled the matrix temporarily.
I'm happy to report this year across the $2 billion barrier, the matrix is mostly back in place. And I think that can place actually in a better way, a little more of an efficient and effective way.
(09:16):
So that's where we are. Sean would say the matrix organization doing much, much larger projects than we ever did in about a quarter of the projects that we ever did.
But at we're at double the revenue size. And then, you know, the show and the best year sector based and a lot more small projects.
That's quite an amazing transition over a relatively short amount of time, you know, and an awful lot of change management goes into making these things.
(09:41):
They don't just happen as you cross the $2 billion threshold, roughly how many projects do you think you guys will end up finishing?
It's interesting. And there's more to the answer than just the number. It's about 200 probably projects this year.
It may be a little more than 200. But, you know, back then when we did 600, we had some large projects, you know, we had a couple of hundred million dollar projects.
(10:04):
We had a number of 30s and 40s and things like that. But we also then had hundreds and hundreds and hundreds of 2 million, 5 million, 7 million going around the country.
And so we were, you know, sector based and historically we were a small projects company. Think of it that way.
(10:26):
And then you think of like some of our competitors that are that are, you know, written large size. They would have, you know, they were large project companies and they all had small projects divisions.
So to make the change, we said, we're a small projects company that has to create a large project division.
And back then that we knew what we were ultimately going to do is create the large project division, the large project division becomes the mainstay of the company. And then we become a large projects company.
(10:54):
And then we created a small projects division and we're actually in the middle of all that right now.
And the challenge and COVID in a way was was an opportunity for us.
You can shed the small projects in a day. You can shed small projects. And so we had, we had put out a bunch of different kind of goals.
One was double our average project size. And we had some return on staff metrics and we cut the number of projects in half and all these things.
(11:23):
You can shed the small ones really fast, but you don't win the big ones very fast. You know, the big ones take you, you know, a year to chase and then a year of precon and then maybe a star.
So we were thoughtful about this kind of, you know, intersecting line of revenue going down and COVID kind of killed a lot of the small projects in retail hospitality for us.
(11:45):
So we really didn't have that choice. So COVID actually really made us accelerate the work and we kind of leaned into that and said, we're going to accelerate this large project work.
And so, but going back to the question of kind of stakeholder management, the, we had multiple ball day offsites with my leadership team because on my leadership team, people's jobs were changing.
(12:10):
Right. Someone who used to own a sector and had the people in the P and L now has no people and no P and L, but they're still an executive vice president. They still have my responsibility.
As you talk in less, what the first thing that came to mind is, you know, it's a cliche for reason, but never let a crisis go to waste.
So COVID was obviously a big catalyst. And it's interesting, your thoughts around large project companies, then building smaller special projects divisions, depending on the sector you're participating in, those small projects are a great way to say sticky with clients and get in really closely to be able to be positioned for the large projects.
(12:47):
So you got both ends to the middle, right?
The small projects got a great training ground for young folks to take more responsibility on a kind of full project scope. You're right. A new client very often doesn't want to try it out on one of their biggest projects, right?
So you got to get in, you got to show them who you are. And so it is interesting as we went to large project, we were so extremely focused on building our large project capability.
(13:11):
And I'm happy to say today we've got, we've got an almost $700 million project going, $3 over $500 million going. We've got, we just turned over our first $350 million project.
And so the mix is really great.
Eventually I want to get to this mix of we have enough large projects that I have ballast in three years of backlog, in enough small to mid-sized projects that can be a little bit better margin that I have this kind of ideal mix of projects.
(13:40):
And we talk about our sustainability as a company and I talk about diversification in three ways.
Geographic, I want to have geographic diversification across the country to weather any kind of regional storm. I want to have project size diversity and then we want to have sector diversity.
And the matrix allowed us to kind of bring sectors that we didn't have into other regions like education to the West, education to the South, etc.
(14:04):
Talk about that less in the matrix and where you are and where you want to take it. What comes to mind for me is just the idea of stakeholder management.
And if you would share the process that you went through to bring those stakeholders along, whether it's employees, whether it's subcontractor partners, design partners, owners.
Yeah, it started with a lot of time, a lot of kind of off sites with my leader team and bring first bringing them along to agree that the matrix was the right structure for us.
(14:35):
Bringing them along to agree that why matrix and why not pure regional, right? And so we brought them along to to where we all agreed in the room that this is absolutely the right growth structure for the future.
And then we had a pretty robust communication plan and roll out plan and stakeholder management plan or change management plan.
(14:57):
And our old sector based model.
We had a whole lot of people sitting in the East that were working on national projects that had to get absorbed into a regional P and L and so I was pretty adamant that no one's going home.
No one's going home in this reorg. So if you're.
A project manager or superintendent who can only do smaller retail jobs and use it in Boston.
(15:25):
And we're going to go to this large project model.
There's a timeline of, I don't want to lose all small projects. And it's going to take some time. So I had some some ability to upscale and train really talented folks that were in the company to get them ready for large projects.
So we put them on projects as kind of the second project manager and the second superintendent and we loaded up our projects with people to get them upskilled.
(15:50):
We also had a real plan to fire large project builders. We needed more outside large project project executives, project superintendents, managers, project estimators.
So kind of putting that out to the company and here's what the matrix is all about. You know, I did just a ton of communication.
We had a lot of town halls with the company. We went through all that racy work. And those were kind of in the regions with regional leadership teams, and their people and then, you know, going through here's what your job looks like and for the project manager and superintendent
(16:24):
and their job really didn't change if this overall business model changes, but we had to make them feel comfortable that it changed, changed the scary for folks. And so tons and tons and tons of communications via email via town hall via sessions that we brought them into talk.
Now all the classic things that change management.
Probably have a whole separate podcast episode on change management and the process you all went through tying it back to the employees and the people that you have on the team. You know, you mentioned that you guys went to ESOP in 2005 so nearly 20 years as an ESOP very mature
(16:58):
ESOPs tend to be in vogue right now. You guys have been at it for a long, long time. If you would talk about how has that employee ownership model influenced the company's culture and performance over time.
You know, I think in ESOP culture, we really do talk about you're an owner, right, there's no individual owner who is making the process of the company, right, there's the process of the company over time, ultimately go to all of you to all of the employees.
(17:31):
And we're very transparent about it. I have an annual shareholders meeting every year we do ESOP information seminars for all new employees that come on. And I think culturally, we talk about the mindset of, you know, if you're a small business owner and you have a client and that client
loves you and gives you repeat business, they want to deal with that owner of the business that owner of the business kind of thinks longer term doesn't think transactionally thinks about how do I keep this client or customer forever.
(18:04):
They'll make financial decisions. They'll make business decisions in the interest of client service and we've always been our differentiator as a firm has always been, we want to be the client service offering out there in the marketplace.
Of course, we have to be highly technical builders, we have to be great builders, we have to build on time on budget by quality. And our differentiator that was our client service kind of model. And so we really lean into it and say, we train on on CX customer service customer experience we have terms that we use like
(18:39):
deliver a 10 on a scale of one to 10, the ride we want the ride to be smoother for client and couple that with an ESOP culture where your people feel empowered because their impact directly affects the profitability of the company which directly then pays them over time.
And so that culture works so we really stress that ownership culture that kind of accountability culture that you have real responsibility. Now we're a big organization so we certainly have our process and our rule on our control rates and risk management all the same.
(19:11):
But the culture works. We recently just had every two years we do a big formal employee engagement survey. You know, we do the best place to work things every year and we get great feedback from that as well but the kind of more formalized employee engagement survey that we do every two years.
Same questions were on our fourth iteration of that over the last eight years now. So we can measure our improvement over time. We just got we just got it back and we got just phenomenal engagement scores and just was almost surprised by how good they were and and and really really happy and they kind of measure against a couple of benchmarks but
(19:52):
you know one of the items was so overall engagement score was an 89 which was just this incredibly high engagement score. But the one measure and actually wrote it down I got I'm just going to refer to it so the question was are you motivated to go above and beyond for the company.
And we ranked 17 points higher than the global average on that one thing alone and you know our industry industry is tough and it takes discretionary effort and it takes going above and beyond and these are measures of our culture and then and there's certainly feedback in there too like people were very happy about our
(20:28):
development planning and they want more people love that we have a robust process and they don't love so much that we have a robust process right.
So right. So long as it applies to everybody else right.
Right. So we we take the data really really seriously. We take it in parts and put it out to the region so the regions can do work on improvements. I share the data. The kind of great stuff and the development stuff for us with the company so I think transparency is a huge part of
(21:01):
the subculture. We have some folks that join us from other firms that say wow our firm never once shared with us a revenue goal for the year or what kind of possibility we made and we share all those things. So we're just very very transparent as an
getting back to the
(21:45):
to a region and then kind of grow around them.
But again, organically, we've made a handful of smaller,
kind of tuck-in acquisitions in the past,
I think where we are today,
and we do, as far as growth philosophy,
I'm very much a growth-driven leader.
I think if you're not growing, you're shrinking and dying.
(22:07):
And we have this incredible college training program
where we bring in 30 to 50 people a year.
And I actually have created a chart with my team
that shows, okay, after X amount of years,
we have this many new project managers
and project superintendents coming online.
Where are we gonna put up?
One, we wanna keep all our great people,
(22:28):
and then we need to create room
for all these people to have opportunity.
You can actually reduce that to a number
that you need to grow.
So we kind of set a 10% growth target per year.
And I think now, the bigger you get,
that's harder to do organically.
I do think we have tons of runway
on the large project fronts
now that we have that capability.
(22:49):
And that capability is more mature in some regions for us
and less mature in others.
And so we need to just grow there.
So I see acquisition as a bigger part of our next 10 years.
You talked about one of the reasons for growth
and advocating for growth is just obviously
it creates opportunity for others in the business.
(23:09):
And if you don't have that,
then you don't have great talent.
And so my next question,
I wanna tie it back to just talent.
I mean, you don't make Fortune's best workplace 16 times
without a great talent strategy
and really taking care of people.
What does the talent development program
look like at Shalmit today?
Timing is great for that question this week.
I'm just coming back from a two day offsite
(23:33):
with 25 folks that have been in a leadership development
program for the last 18 months for us.
And the last two days was the culmination
of that leadership development program.
And everybody together,
we flew them all in from around the country,
did a great session.
They all, the culmination of the program
is them to present their action learning projects to us,
(23:55):
which are kind of real company issues to solve.
And what's kind of amazing is the issues
that are chosen or issues we've been,
we and every one of my peers that run consortia
we're all dealing with the same issues.
And to hear these folks with new ideas and fresh energy
and kind of more modern ways of thinking
about how to solve these problems was really exciting.
(24:16):
So we run leadership development programs.
So I think probably seven or so years ago,
I've hired a chief people officer
and she's phenomenal, Mary Ann Monti.
And she reports directly to me
and I've elevated talent to the highest level.
To really say talent is what we have, right?
We don't own equipment and we don't own buildings.
(24:39):
We have talent, right?
That's what we have, that's our resource.
And so a lot of work along the way,
we kind of annually, we went to focal point
once a year reviews, but then we spread talent
both in the spring we'll do,
we've separated kind of the incentive piece
from the development piece.
So in March, you get your review,
(24:59):
which talks all about development.
And then in September, you get the financial component of that
and have another conversation about that.
But then all these touch points,
we put in a platform called Shama U.
And it's interesting for years,
we had something called Shama U,
the letter U like university.
And it was a pretty standard curriculum based training
platform, minimum requirements, you take these classes.
(25:21):
And now it's actually her platform is called Shama U YOU.
So Shama U, you own your development.
I'm really proud of our kind of diversity numbers
at the company.
And we're 30% or 31% women in the industry
that's an average of 10, wow, we were 11% people of color
in an industry that's an average of three.
(25:43):
And so I'm really happy with the numbers,
but our people said, we feel like we belong here.
So belonging is really high.
They said, but I don't know if we feel like
we have the same opportunities.
We've created a law of work around that.
We run this program called sponsorship,
which every one of my team, my executive leadership team,
(26:05):
we call the ELT.
We all have a sponsor.
And our job very different from management coaching,
mentoring, sponsoring is the true champion of people.
And so we've got 30 or 40 people in that program right now
that have sponsors.
I'm in the process right now.
So my COO, my chief people officer and me,
(26:25):
we took 10 each of these folks
and we're doing check-ins with them.
I got on a call the other day, a couple of days ago,
they wanted to say, how sponsorship work for you?
And is it clear that sponsorship is different
from coaching or mentorship to you?
And she said, very, very clear.
And she goes, I've been promoted twice
since I've been in the program for a year.
So I feel like it's working for me.
(26:46):
And like, great.
And then I ask them, do you have access
to the leader of your group or function?
Do you feel like you're getting pushed on opportunities
that people know who you are enough to propose you
on a stretch or opportunity?
And I'm here in great feedback.
It's the third iteration of the sponsorship program we run.
So we do that.
We do have a mentorship software where that pairs people
(27:09):
to kind of try to eliminate some bias from the system.
How will people fit best together as MentorMNT?
We have a mentorship program.
We do a ton of training, development around
how to be a good manager, how to be a good leader,
how to have good conversations, all those things.
So, yeah, there's a lot, a lot, a lot there.
And we do value talent as really all we got.
(27:29):
A great explanation, less of the investment,
not just in dollars, but in time and executive time
and leadership's time in people and in the talent.
And it's so many things that you touched on.
Two follow-up questions, one of which
around the sponsorship program, how did you first come up
with identifying and picking sponsors?
(27:50):
Great question.
So we run an annual talent review process.
And it's not an unusual process.
It's a nine box process, potential and performance.
So every region goes through their people.
We talk about where they kind of fall
and in our kind of talent matrix, if you will.
(28:11):
And we then, you get your top right box,
which is really high potential and really high performance.
Those are your absolute all stars.
And then you kind of lay or overlay.
And really the sponsorship program is really for,
I'd say our underserved population, if you will,
who are the folks that need more championing?
(28:34):
Who are the folks that need that?
And it's pretty easy to create that list.
And so as we've done it, at first it was only the 10 of us
on the ELT that had sponsors.
And what I'll call sponsorship 1.0.
Sponsorship 2.0, we expanded it.
We gave a couple of us two sponsors.
And then sponsorship 3.0,
(28:56):
we went down into the SLTE to get 20, 25 more sponsors
so that we could expand the program
and actually do more with folks.
And so we're super proud of it.
Our people love it.
These check-ins are new, the ones I'm doing
over the last maybe month I've been doing them.
I think I've done about five.
(29:16):
They're wonderful conversations and they're folks that,
I don't really know that personally.
So I get on this call and like, first of all,
how's sponsorship working for you?
How's your sponsor?
Are they making time for you?
And when they make time for you,
do you feel like it's a different time
than you get anywhere else?
And the answers have been yes.
And so we had to coach all the sponsors
(29:37):
on how to be a sponsor.
So there's some training required there.
I was just, and I got to know these folks on the call
going like, hey, I got promoted two times.
Or yeah, no, I'm one female superintendent.
Just finished a very successful turnover
of a $100 million K through 12 school.
And I had my call over a couple of days ago and she said,
(29:58):
I just got named on my own.
She was the number two on that 100-year-old school.
I just got named on my own ground up school.
And I'm nervous, but my sponsor feels like I'm ready
and put me forward and I'm gonna go do it.
Those are the examples that make you feel good.
You mentioned the Action Learning Program
that's part of your development model
and high potential model.
(30:19):
We are big fans of that approach and that philosophy.
We do it a lot with our leadership development work.
It's one thing to have a team go off
and identify a problem and make recommendations.
It's another that's, okay, now how are you going to bring
about this change in the company?
The problem identification and recommendations
is the easy part.
How do you make it stick and make it systemic
(30:41):
is the challenge, hence the leadership development
opportunity.
Exactly.
And we're very over about that.
And I closed out the session yesterday
and we had six groups, so six topics.
And from risk to customer service
to kind of proper levels of support staff
(31:02):
to how do we differentiate in pre-construction
to sort of tackling big media issues.
So in the course of the Action Learning Project,
they had to engage multiple stakeholders
from all over the business.
So there's this awareness thing.
So by closing thoughts, I said, folks, remember,
first of all, I think they all did a great job.
Some groups kind of more clear and concise with,
(31:24):
this is what we got to go do.
Some a little less clear and concise
because it's complicated, right?
We have other teams working on pre-construction initiatives
in two or three places in the company
and how this group gets assigned it.
And they have to work with all those teams
and then someone's got to reduce the scope
so we're not boiling the ocean and to get something done.
(31:45):
We made them all follow a change management model
called, I think it was called ADCAR to present to us.
And we'll have solid meetings with them,
but I did remind them that a huge part
of the Action Learning Project is what you went through.
The next part is what you're gonna go through
and having to kind of create your team,
(32:06):
having to create a charter, having to tackle the issue,
how to then reduce the issue.
And one team came in with an issue
and this was maybe six or eight months ago.
Kind of round one of their presentation with their charter.
And as an ELT, we thought they missed the mark on the charter.
And so we gave them feedback.
(32:26):
When they presented to us two days ago, they said,
so here's our new presentation
and we felt like our last one was met with some hostility.
That's how they opened their session.
And anyway, and they did a phenomenal job of not,
and they didn't abandon their other thing.
They kind of addressed it.
They have some advice there and they pivoted
(32:47):
to use that word, it's a phenomenal job.
And so I think that alone is a huge learning.
Just to transition a little bit less,
10 years roughly in the role that you're in now,
having been a lot of time prior to that
in leadership positions, executive positions.
I'm curious as to how would you describe the role
that you stepped into versus what you thought
(33:08):
you were stepping into 10 years ago?
You know, it's interesting.
Our former CEO, who was a real mentor to me,
he said to me one time,
so I was the CEO for 10 and I was the CEO for three.
So go back about 13 years.
And I was 13 years younger than maybe a little more brash.
(33:28):
He kind of said to me at one point
when I was maybe a little too anxious,
he said, be careful what you wish for.
You might not like the job when you get there, right?
And it stuck with me all this time.
And I really liked the job.
And I'll tell you, leading through COVID
was really difficult for us.
(33:49):
And in hindsight, I'm very proud.
We took a people-first-at-all-times approach during COVID.
Keep your people safe, issue, keep them engaged,
keep the culture intact as you have this kind of
really remote workforce for a period of time.
And by the way, we're completely changing
(34:10):
the business model, right?
So those were hard years where the word I'm using
is now we have traction in that business model pivot,
is we have traction in all our regions.
It's a lot more fun.
During COVID, as a leadership team,
you almost have to play down a level
and worry about collecting money
and worrying about accelerating schedules
(34:32):
and projects that cut delayed.
And you really almost play down a level
when you're managing through a crisis.
Now, back up a level, looking at the next 10 years,
in your growth plan, working on some acquisition now,
the continuation of the strategy,
bringing leadership development programs are back,
all those things, it's much, much more fun.
(34:53):
I've learned a lot along the way of surrounding myself
with really talented people, freeze me up to do the things
the business I think needs the most from me,
and that's externally facing strategy,
clients, growth, acquisition, things like that.
And I'm able to do all that stuff now,
and I'm a lot more fun than I was a couple of years ago.
(35:16):
Bill Gates has thoughts around compounding.
Most people overestimate what they can get done in a year,
but dramatically underestimate what they can get done in 10.
And so if you just toil away at it, work, work, work, work,
over time, the snowball starts to catch up
and momentum will carry you.
And then to your point, it gets more fun.
It's the grind in the grit and the stick to it-iveness
(35:36):
in the journey to get to that point
where a lot of people decide to step off the ride.
I use the term a lot, and we used it in our executive offsite
this week, prepping for some strategy work.
When we look out at the last five years,
we still need to stay the course of what we're doing right now,
because yes, we have traction, but we're not there yet.
And you're kind of never there.
(35:57):
But we also, we have to be thinking about the next 10 years,
what does Shama look like 10 years from now?
Let's stay this course, and we have to start adding to it now
for things to stick in 10 years.
So that's something I kind of think about and talk about a lot
with our team, and I'm really proud of the leadership team
we have is our ability to talk straight about stay the course
(36:22):
versus change it.
Most companies are not good at stopping doing things,
and we're one of them.
So we talk about what should we stop doing as well.
Yeah, I probably at some point along the way
had the discussion around the net, net zero.
Most policies are replacing something else or fixing something,
and so we got to at least get rid of one if we're going to add one.
(36:43):
You can't just keep filling the bag otherwise,
the bag breaks at some point.
One of our leadership development groups that presented,
the first thing they presented was on SOP
that we created over the last couple of years.
And they put the flowchart on the screen,
and it was really carousel.
And our COO was in the room.
And then they presented a new streamlined SOP
(37:05):
that was like a quarter of the steps.
And they had data on how much we were complying with that SOP,
and we weren't because it was too cumbersome.
And these folks got in the room and had
to present to the COO that his SOP stunk.
And here's the new one.
And he stood up and said, wow, now I know I know it was compliant.
(37:28):
And he just said, and I'm really happy that you have taken
a crack at this, and you've made it significant
for your improvements.
So the conversation just talked about between you and Tom
back in the day.
Be careful what you wish for.
I'm paraphrasing.
I'm curious, knowing what you know now, what advice would you
go back and give yourself back then?
That's a good question.
(37:49):
What advice?
I love the quote you just shared about overestimate one year
and underestimate 10.
And that really hit me just now.
And I would have said to myself, it's
OK to stay the course, be patient staying the course.
I'm a very self-critical person of myself.
And yet don't be so frustrated with the lack of progress
(38:13):
on some of the change that you want to make.
Stay the course, and it will work out.
But it does take more time.
Things take more time.
Change management, we're a strong culture,
and there's so much that's good about that.
But making change in a strong culture
gets even more difficult.
And so early days, I would say get more people to help
(38:38):
versus think you can do it yourself.
Here's a piece of advice that I think I finally
may have learned.
Yeah, it's pretty cool when you can accomplish something
really special and unique.
I've been reminded, I can't remember who,
there's a college football coach, I think,
that was asked about the costs of leadership.
Everybody talks about the attributes and the pluses
(39:00):
and all the platitudes and the accolades.
But he talked about three costs of leadership.
He said, you'll have to make hard decisions that negatively
affect people you care about.
You'll be disliked despite your best attempts
to do the best for the most.
And you'll be misunderstood, but won't always
have the opportunity to defend yourself.
(39:20):
And so just know when you're signing up for a gig like this
or any leadership role, there is a cost component to it.
Which is important to understand, but worth it
if you can kind of get comfortable with it.
Right.
And I agree with all of those.
Those are all real and hard.
This is saying it's lonely at the top.
(39:40):
I mean, I have a really good two or three person
inner circle of leadership here.
And we can talk about everything.
But yeah, you can always publicly
talk about why you did what you did, right?
And especially in tougher times, it's hard.
But yeah, that's interesting.
I liked that.
You've been very gracious with your time.
I have one final question for you,
(40:02):
which is just as you look out over the next five or so years
as an industry, where do you think the industry is five
years from now?
I think five is a pretty short window.
Certainly, the industry is seeing an onslaught
of investment in technology.
If you look at some of the graphs of the investment dollars
that have gone into automating our industry
(40:24):
in the past 50 years versus the last three,
then the amount of data created in the last three, or four,
or five, whatever, it is remarkable.
We're piloting many, many things.
We're playing with AI on many fronts.
There's no big, broad AI solution here,
but it's integrated into so many little things
(40:46):
to make things more efficient.
So I think you're going to see more and more improvement.
The question we ask is, what's going to disrupt our industry?
Like Uber disrupted the taxi industry, right?
I don't see technology doing that.
I see it improving the industry.
I think the really great builders are great communicators.
(41:12):
They're great at laying out a decision.
They're great.
They can go from really high level of laying out the plan
to really low level of the exact correct stainless steel
screw.
I have a really, I can't, that's not going away.
We're using robots to lay out some of our jobs now.
And I'll tell you what, we check the robots lay out.
(41:34):
A human checks the robots lay out.
So we're practicing things like we talk a lot
about lean philosophy.
We are in a number of IPD contracts.
We employ kind of last planner on all our projects.
And those things are all tried to eliminate gaps, constraints,
and get team members to make commitments that they stick to.
(41:57):
How does kind of technological onslaught now help that?
It'll help it.
I think you still have to have those people kind of talking
and willing to say, this is what we'll do.
So five years from now improved, but not radically changed
would be what I would say.
That's probably a good place for us to end the conversation
(42:19):
before I wear out my welcome.
But listen, again, I can't thank you enough.
Really appreciate it.
Always fun to spend time with you.
And thanks again.
Thanks so much.
Thank you for listening.
And please remember to like or subscribe to the podcast
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