Iris Harrell Stepping Back

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Many remodelers don’t have a succession plan in place. Iris Harrell was no different. What happens to your remodeling company if something happens to you?

September 01, 2008
Sidebars:
Executive Summary
A week in the life

Harrell Remodeling CEO Iris Harrell still loves what she does, but she wants to prepare the company to be successful without her day-to-day involvement.  Photo by Gary Laufman

Everybody’s mortal, and the idea is not easy for most people to embrace. It’s one of the reasons many remodelers don’t have a succession plan in place.

Iris Harrell was no different. For years she didn’t give much thought to more than the next year in her award-winning design/build firm.

“I finally have passed the test of realizing I’m not going to live forever,” says the CEO of Harrell Remodeling. “There are 46 people whose lives are greatly affected by what happens to this company. What will they do if something happens to me?”

For Harrell, the answer has been an employee stock ownership plan (ESOP), where a portion of company profits are used to purchase stock in the company every year. The company is currently 24 percent employee-owned, with a goal of 100 percent ownership in five years. The program helps to keep employees focused on profits, because the more profitable the company is, the faster it will become 100 percent employee-owned.

To participate in the ESOP, employees have to work at least 1,000 hours a year and have completed at least six months of service with the company. Shares are distributed proportionally based on an employee’s wages. (There are several legal and business ramifications of an ESOP. For more information, visit www.esopassociation.org or www.nceo.org.)

With no children to pass the business on to, Harrell and her partner (and former COO) Ann Benson wanted to see the company live beyond them.

“There’s some ego involved,” Harrell says. “I want to leave a legacy, to see this company go on to the next generation.”

Although selling to a new owner was an option, Harrell says she wanted to make sure the company’s culture was preserved and the current employees were rewarded for their years of work.

“I think the people who brought me here should be the ones who take it on further,” she says.

Letting Go Without Leaving

Implementing an ESOP has addressed the financial aspects of succession, but the task now is handling the human side of the transition.

Getting the right employees is important. When making hiring decisions, Harrell prefers to hire for a culture fit rather than construction skills, figuring those can be taught.

Over the next four or five years, the task is to groom the employees to take over. It will be made easier because of the presence of General Manager Ciro Giammona, who already handles much of the day-to-day management.

“He makes my life so much easier as CEO,” Harrell says. “The staff in general is great. Any company would love to have these people.”

Benson retired last year after her second stint with the company, but Harrell says she’s in no hurry to retire. At the same time, she wants to prepare the company for life without her.

To that end, she’s cut her time in the office to under 40 hours a week and doesn’t come into the office on Fridays anymore. Next year, she’s aiming for 32 hours a week and 27 or 28 in 2010.

“The reason is if I continue to be here all the time, they’ll continue to look at me to make the decisions,” Harrell says. “As long as I’m here 40 hours a week, people will think the ship can’t run without me.”

One of the biggest challenges for Harrell, she says, has been reducing her role in sales. Her role as the leading salesperson and the engine for growth in the company has been a source of pride for her for years. It still takes up about 25 percent of her time but is not the focus it once was. This year, Harrell says she’ll account for about 10 percent of the company’s projected $10 million in sales. She plans to cut that to 5 percent next year and be totally out of sales in two years.

While still spending time on sales, Harrell now focuses on marketing. She writes columns for two local papers and, along with other staff members, sets up workshops and gives speeches on topics such as green remodeling and universal design.

By freeing herself from everyday responsibilities, she can also set the agenda for the company, or what Harrell calls the “visionary things,” e.g., anticipating the growth in green five years ago because of what she was seeing in other parts of the state and training her staff to be ready for that as demand has increased.

“People are just starting to catch on here, but it’s important because I think it is the movement of the future,” Harrell says.

She also has been able to spend time on building the Harrell brand. Harrell admits she knew little about what the Harrell brand was before she hired a marketing firm to help her with it several years ago.

“We didn’t know what distinguishes us from other people,” she says. “We can say it’s quality, but everyone says quality.”

To drill down to the true differentiators, the marketing company interviewed 10 of the firm’s favorite clients to see what they thought of Harrell Remodeling. The results were anonymously presented to Harrell and her top managers. Working with the marketing company, they were able to identify several key branding points that set the company apart.

One key finding was that the clients felt the Harrell team were good listeners. This is something the company has cultivated by sending designers and top-level production staff to Sandler sales training.

“We respond to the client’s pain and what they want and need,” Harrell says.

That message was carried over to the branding with the company’s tagline: we never forget it’s your home. The tagline is used on all of the company’s marketing pieces.

Another characteristic was that Harrell Remodeling was expensive and reliable. Harrell has embraced that idea by emphasizing that you pay well to get the best.

“We do things differently, but it’s for the betterment of our clients,” she says. “We’ve learned not to be ashamed of that. We hire the best staff, so we’re going to have to pay well. Otherwise, you won’t get the outcome you want.”

The biggest challenge in branding has been to balance the recognition of the firm’s name with the expectation that Harrell herself will be involved in the project.

“When you go to Kentucky Fried Chicken, you don’t expect to see the colonel there, but you know he would approve of the gravy,” she says. “We’ve got to get past people thinking I’m driving every truck, that I’m designing every job, but at the same time deliver the message that I approve of what’s going on.”

The workshops have been an important part of that, allowing the employees to take center stage. Giammona and other staff are taking a public role with the company through the workshops, podcasts and articles.

“It’s teaching all of our people to be presenters — making them comfortable behaving famously, as Sandler would say,” Harrell says.

Keeping the Fire Burning

Learning to let go hasn’t always been easy for Harrell, but it’s what will allow her to keep doing the job for years.

“Somebody heard me say that I get eight hours of sleep a night and only work 40 hours a week, and they said they didn’t know contractors were allowed to do that,” she says. “I think you have to do that or you’ll get burned out. You have to have a life apart from the business to regenerate yourself when you come back to the business everyday.”

For Harrell, that inspiration has come from Benson, who has always encouraged her to keep focused on life outside the business. Harrell says for her it’s been a matter of finding her spiritual roots but that everyone should find what gives them an escape.

“There’s another reason we’re here besides putting that casing on tomorrow,” she says. “I look for ways I can make a positive impact, nurture myself and still help others.”

 

Executive Summary

Harrell Remodeling, Mountain View, Calif. 
CEO: Iris Harrell
Company focus: Design/build 
2006 volume: $8.3 million
2007 volume: $11,039,000 
Projected 2008 volume: $9.5 million to $10 million
Employees: 46
Founded: 1985
Biggest challenge: Preparing the company for the transition to the next generation and keeping the Harrell Remodeling brand strong even as Iris Harrell reduces her everyday role in the company. 
Web site: www.harrell-remodeling.com




A week in the life

How Harrell Remodeling CEO Iris Harrell spends her average 40-hour work week. Harrell also does not come into the office on Fridays and takes about 12 weeks of vacation a year.

Administration (e-mail, manager meetings, coaching) 21 hours
Marketing (including speaking engagements and networking) 9 hours
Sales (working approximately two leads per week) 5 hours
Design 5 hours

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