Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
Sawhorse Inc. founders discuss stepping away from their businesses and letting new employees take over.
Most remodelers reach a point where they must decide if major company growth is a profitable option. For some, the costs of growth surpass any benefit from the sales increase. For others, bigger is better. But for most, the decision is fraught with uncertainty: Can I back away from a business that I founded and let others run it?
Carl Seville of SawHorse Inc. in Atlanta has made his decision. With his partner, Jerome Quinn, he has stepped back from the business in such a planned and orchestrated manner that he drives by a job sign and realizes he hasn’t visited the site, nor does he know the intimate details of the project. Quinn compares the decision to step back to reaching the "end of our entrepreneurial rope." They have created a midlevel management structure that has freed them to focus on long-term company goals that include phenomenal growth during the next several years.
Partly as a result of their success in "stepping back," SawHorse was named the Chrysalis Remodeler of the Year last year. Editor in chief Rod Sutton talked with Quinn and Seville about how they managed the transition and lengthened the rope.
PR: What made you decide to step back from the day-to- day operations?
SEVILLE: We realized that in order to grow a company that was able to essentially expand indefinitely, we need to be out of all the day-to-day operations. If we’re critical to all the day-to-day operations, the company can only get as big as the hours that we have in our days.
A long-term goal is to make us dispensable on a day-to-day basis, to give us an opportunity to look at bigger, strategic issues. [We want to] spend time bringing in the right people and looking for other business possibilities: expansion into other geographic areas, expansion into other modes of business.
QUINN: It’s not all just growth, but to be better. We’re trying to develop a model for a company that has some growth. There’s a certain creative challenge in trying to find a model that works in an ever-changing industry.
PR: What started you on this path?
QUINN: One of the things that accelerated this rapidly is, as we came into 1997, we had experienced dramatic growth. We came to the end of our entrepreneurial rope. [Although we’d been] giving people responsibility, it started becoming physically impossible to get our hands into everything. Then we moved into that next development of business, out of entrepreneurial into something that required more organization.
SEVILLE: As volume increases, we need to have more structure. We can go to a department head and find out what’s going on in the department. [We can] understand that they’re accepting responsibility for the work being done effectively, efficiently and on time. Communication is moving toward department heads, meeting with the individual people in the department to execute the [corporate] plan.
PR: The department heads have taken on the day-to-day management?
SEVILLE: It’s not an easy thing to delegate responsibility. We’re slowly learning new ways to do it better, by delegating it to the right people so they take responsibility to get the work done in a way that is appropriate.
PR: How have you done that?
QUINN: What we sell is terribly complex. Part of what we’re being driven by is "What’s the optimum organization to provide the kind of service our clients need?" One of our goals is to create a system that is flexible and reduce the stress on our project managers. We give our project managers authority and then step back and let them do the job. We tell them, "You run the job, we back you up, and we give you the authority to do that."
Departmentalized for Growth
PR: How do you find good midlevel managers?
SEVILLE: We try to select the people who have the ability and right attitude. In some cases, we had somebody ready for the position. In other areas, people have risen from within the ranks, gradually taking over.
QUINN: If we were Dell Computer and we needed a head of sales, we would have gone to Compaq. There are computer companies that have different models, but they have enough of a similarity in models that you could interchange the parts. Right now, there are not a lot of remodelers large enough to have midlevel managers. So there is not a large population of managers for us to draw from.
Our jobs are complex, and they need to be professionally managed. Finding those people is difficult because you seem to be looking for very opposite kinds of things in one person. People who have developed strong technical skills may have done so at the expense of good people skills and vice versa. Project managers are special individuals -- they have to be exceptional at both.
When you look at universities, most construction management people don’t even know that they can make a living in remodeling. We’re doing some internships to let people know that construction is available on this scale and creative construction is available on this scale. It’s amazing how many people are saying, "This is what I’ve always wanted to do. I didn’t know I could make a living."
PR: How do you motivate these middle managers?
SEVILLE: We pick people who are self-motivated. We’re working hard to pick people who are driven to do the work right and to do the work that makes the company better. As part of that, we’re putting together bonus plans that are based on corporate goals.
Giving people the authority has a lot to do with it. People only get partial responsibility and partial authority, "Do this piece of the job, you have four hours to do it, then I’ll tell you how you’re doing." With our people, it’s open book. We give people real authority, real responsibility.
QUINN: We try to pick people with the right attitude. What did [former Chicago Bulls stars Scottie] Pippen, [Dennis] Rodman and [Michael] Jordan ever have in common? How much were they motivated by their high salaries, and how much were they motivated by whatever magic they had to put it together? Magic’s hard to come by, and you have to try a lot, but when you get it to cook, it really works.
PR: How do you evaluate managers?
QUINN: We have benchmarks. We are very aware of what product managers are producing, whether he’s coming in under budget, whether his clients are happy. But we also try to put that into context. He has a lot of authority, but it’s not necessarily all his fault if the customer isn’t happy. We are putting more process and controls in to take a look at how the company is doing.
PR: What’s the one challenge in doing what you’ve done?
QUINN: We’re in a constantly changing environment. Continuing to find the right people is key. If we can’t find the right people and continue to bring people in, we’ll have to continue to take care of it [ourselves].
SEVILLE: It’s the hiring. It’s finding the right people, whether it’s bringing them in young and developing them, or whether it’s bringing them in from outside.
Is It Time?
|The decision to step back doesn’t occur overnight. Quinn and Seville suggest these signs that might indicate a reorganization is needed:
PR: You’re now in a position where you don’t necessarily know the specifics about each job.
SEVILLE: The key is we have other people in the company that sell, so we have not met the clients initially. They’re empowered to sell the company. Other people have designed it, because we’re not. Other people are estimating it, and other people are building. We have a global view, but the fact that other people in the company are empowered to do those things -- and they do them effectively -- is a great feeling.
QUINN: We’ve consciously tried to make this company SawHorse and not Carl and Jerome’s Excellent Adventure. It really is a validation [when we don’t set foot on a job].
PR: How has this affected the business?
QUINN: This company has sustained consistent growth over the past 10 years. Between 1996 and the end of 1998, sales doubled. Profitability over the same period went up over 100%. You can get growth at the expense of quality; you can get profit at the expense of the future. So we’ve said for us to raise the bar on profitability and growth, we have to raise the customer service every year.
Our customer service has been tracked on an A-F scale. We were running a B+ last year. This will be our most profitable month, and we’re pushing to an A average with our clients.
We have a goal you can’t measure. Our goal is to set a standard of excellence that we’ve never set before and then live by it. That [goal] came from our people. It came from us letting go.