Out of the Office

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After almost 30 years in business, most companies have settled in to one of two modes: a growth model with a president or CEO who is putting in 60 or more hours a week or a comfortable, stable stage where the chief has greatly reduced his involvement in the day-to-day operations.

February 01, 2008
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Executive Summary

Well-Read

 

Getting the right people and systems in place has allowed Marrokal Construction President to reduce his day-to-day involvement and still lead the company to strong growth.  Photo by Lee White

After almost 30 years in business, most companies have settled in to one of two modes: a growth model with a president or CEO who is putting in 60 or more hours a week or a comfortable, stable stage where the chief has greatly reduced his involvement in the day-to-day operations.

Gary Marrokal of Marrokal Construction Co. has managed to find the best of both worlds, with a company that is projecting growth of nearly 20 percent in volume this year. At the same time, Marrokal is putting in only 20 to 25 hours a week in the office and taking a week off every month to spend at his vacation home in central coast California.

A decade ago, when he was working 70 to 80 hours a week, Marrokal decided that he wanted to get to a point where the company can, for the most part, run without him.

"I knew that as I got older there was no way I could keep going at 60 to 70 to 80 hours per week," he says. "I never really pushed for growth, but it happened because we had good people and did good work."

Right People in the Right Place

Marrokal has seen plenty of remodelers burn out from heavy workloads and didn't want that to happen to him. He also knew that moving slowly would help the company — and him — adjust to the changes. He started out taking every other Monday off, then every Monday, then other days. Now, he's scheduled to be in the office only three days a week. "Every year I want the company to rely on me less."

Starting with small steps is the key to succeeding, he says. For example, if you have 10 duties that are part of your everyday responsibilities, rank those in importance from one to 10 and give Nos. 9 and 10 to someone else, Marrokal says. To make the transition work, a company has to have good people on board, from the top management all the way down.

"It means those directly below you will have more work, so they need to delegate to people below them," Marrokal says. "You have to have the right people in all those positions or it won't work."

For Marrokal Construction Co., the upper management comprises a vice president of administration, a vice president of production, a director of design and Marrokal, who still personally oversees the seven design consultants who make up the sales department.

"I had to learn to let go and not micromanage," he says. "It was important to accept that they might do things differently than me — and it might be better."

That makes finding the right employees especially important. Marrokal doesn't hire every employee anymore but does interview potential managers and design consultants. Candidates are interviewed at least twice by two different employees. If Marrokal is hiring a manager, he will meet with them several times, including in non-work settings. For example, when considering one recent hire, Marrokal and his wife took him and his wife out to dinner.

"No matter what we do, it's still a flip of the coin," he says. "We don't really know until they get here."

Marrokal also tries to create a positive work environment to entice new employees and keep the good ones he already has.

"We have good compensation, good benefits, but more importantly we have a group of people who fit together as a team," he says. "That gets everyone excited."

That doesn't mean you can ignore the basics, though. Marrokal pays its employees more than what the competition does for comparable positions and pays major medical for employees and their families. The company also has profit sharing in which the company pays into the plan an amount equal to 15 percent of an employee's salary.

Treating people with respect extends to trade contractors, who Marrokal uses for almost all field work.

"There's a learning curve, so we want to keep the good ones," Marrokal says. "For 27 years, I've paid more quickly than anyone in town. No one has to ever ask me for their money."

Marrokal also rates his trade contractors on a variety of factors, including quality of work, timeliness and cleanliness. (Professional Remodeler recognized Marrokal as a 2007 Innovator for how he manages the trade contractor relationship).

Letting go without losing control

While the company does have standard procedures in place for many things, Marrokal also believes he has to trust in his management to make the right decisions without being overly constrained by too many systems. "You have to have some, but if you have too many systems, you become government," he says. "If a business runs like the government, you're going to go under."

Instead, Marrokal watches several key indicators through weekly and monthly reports to make sure the company is staying on course. Every week, he gets a list of leads that tells him about the project, which design consultant was assigned the lead and what happened to it. This allows him to see if leads are increasing or dropping and if the company's close rate is slipping. Another important number for Marrokal is "prelims," people who have paid the company a retainer for design. Because he knows that 85 to 90 percent of those clients will eventually sign construction contracts, Marrokal can predict the company's future volume. For example, if the pace is for 110 to 120 prelims, that tells Marrokal that the company will have 100 jobs for the year. With an average job size of $200,000, that means $20 million in volume.

By tracking the trends and cost per lead and cost per sale, Marrokal can see problems coming well before they develop. It was this data and his experience that prompted Marrokal to start increasing his marketing budget two years ago, putting the company in a better position than the competition when the market slowdown hit.

"Our marketing budget is 100 percent more than it was a couple of years ago," he says. "Even so, leads were down 30 percent this year, but we sold more than ever. We're spending more to get fewer leads, but we're closing better."

Marrokal credits that, once again, to the good team he has in place and an emphasis on working every lead.

"The jobs are still there — it just takes a little more work to get them," he says.

Carefully watching the numbers is also an important part of planning growth. At each level of growth, the company added new layers of overhead, and it became important to know what that growth would cost and how much more Marrokal had to sell to pay for it.

"You have to know what your sweet spot is — where you want to be and just as importantly where not to be," Marrokal says. "For example, when we were in the $7 million to $9 million range, that was a bad spot. We had to add overhead at $7 million, but we had to get to $9 million to pay for it."

That's why it has been important to manage growth and make sure the company was ready to make the jump to the next level.

"You need to know those markers the year before you get there," he says. "You've got to jump real quick."

As he continues to position the company for future growth, Marrokal has no intention of entirely removing himself from the management.

"I really enjoy what I do, so I don't see any need to do that," he says. "I'm getting a different level of enjoyment from the company now. I really enjoy watching the team work. It's like if you've raised children and now you're watching them raise their own."

While he doesn't have a succession plan in place yet, he would like to see key people from the company take over one day. He expects that to happen as he continues to reduce his day-to-day involvement. He and his wife plan to spend even more time at their vacation home, perhaps two weeks a month.

"My goal is for it to continue on with the people here," he says. "Down the road, I hope to see another generation benefit from this company."

Reviewing agreements and coaching sales 5 hours
Meetings with entire team and key managers 10 hours
Reviewing company numbers 2 hours
Handling personal matters 5 hours


 

Executive Summary

Marrokal Construction Co., Lakeside, Calif.

President: Gary Marrokal

2007 projects: 85

2007 volume: $15.1 million

Projected 2008 volume: $18 million

Employees: 30

Founded: 1981

Biggest challenge: Keeping an eye on marketing. "The same things that worked 10, 15 years ago don't work today," Marrokal says.

Web site: www.marrokal.com



Well-Read

Gary Marrokal is an avid reader of business books and says they have greatly improved his company and his life over the last 27 years.

Four of his favorites:

"Raving Fans: A Revolutionary Approach to Customer Service" by Ken Blanchard and Sheldon Bowles — The bestselling book dedicated to creating customers who are more than simply satisfied has shaped the way the company approaches customer service.

"How to Win Friends and Influence People" by Dale Carnegie — The classic book and the associated Carnegie training sessions have been an important part of Marrokal's approach to sales.

"Good to Great: Why Some Companies Make the Leap" by Jim Collins — Marrokal constantly strives to make the company better, and this book, which looks at 11 companies that significantly improved their performance, has been a key influence.

"Too Young to Retire: 101 Ways to Start the Rest of Your Life" by Marika and Howard Stone — As Marrokal reduced his day-to-day involvement in the company, this book has helped him figure out what comes next after work life.



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