The Corner Office Part 2: Business Focus Sets National Remodeler Apart from Competition

"The Corner Office" is a look at the top executives at large remodeling firms. This is the second of three features that profiles these industry leaders and examines their unique business issues. Many remodelers have built successful firms without ever taking a job more than 10 miles from their office.

August 31, 2007
Sidebars:
Executive Summary
A Week in the Life

Patio Enclosures' CEO Kenneth Sekley is not your typical remodeling executive; he holds a chemical engineering degree from Princeton and an M.B.A. from Harvard.
Photo by Marc Berlow

"The Corner Office" is a look at the top executives at large remodeling firms. This is the second of three features that profiles these industry leaders and examines their unique business issues.

Many remodelers have built successful firms without ever taking a job more than 10 miles from their office. With market conditions and building codes varying from city to city and even neighborhood to neighborhood, straying too far from home can be a logistical nightmare.

That makes the success of Patio Enclosures, with locations in 32 states and two in Canada, something of an anomaly. And unlike many other companies with a national reach, Patio Enclosures owns the majority of its local branches, with only a handful of franchisees and dealers.

With such a large reach, maintaining quality at all of its locations is the company's biggest challenge. By acting as manufacturer, designer and installer, the company is able to control much of the process, says CEO Kenneth Sekley. It centralizes many important functions such as marketing and advertising that deliver a consistent message to homeowners from Boston to Milwaukee. At the same time, local management plays a big role in the company's success because it's impossible for the central office in Macedonia, Ohio, to make every decision.

"We rely a lot on the front line supervisors that run the day-to-day operations," Sekley says. "They're the ones who know the local lexicon, the local codes and the local economies. You've got to have a strong management team out in the markets making good decisions."

A Time of Transition

This unique structure was one of the things that first attracted Sekley to Patio Enclosures when he joined the company in 2004 as president and chief operating officer.

"It was a great product and a great concept, with a vertically integrated business model that was very attractive," he says.

Sekley took over as CEO earlier this year after CEO Robert Schneider, who had led the company for most of its 40-plus years, retired. Sekley's admittedly not the typical remodeling executive, with a chemical engineering degree from Princeton and M.B.A. from Harvard. He had held management positions with several companies, most recently at ICI/Glidden Paints, before joining Patio Enclosures.

"That was my real entree into home improvement," he says. "It's a great industry where we can really make a difference in people's lives."

He also enjoys being able to see the end result in a way that he couldn't at previous jobs.

"I get a lot of gratification that we are able to sell something where we have a direct relationship with our end-user," he says. "It's great to build that relationship, to nurture it."

When Sekley came on board, he knew he was in position to take over for Schneider, who had been planning his exit for several years. Schneider's knowledge of the company and the industry helped make the transition easier for Sekley, but the longtime CEO's departure was a big change for a company he grew from a single location to a national presence over the last four decades.

"Bob has a strong personality, which was really infused into the company," Sekley says. "For a long time, Bob managed every aspect of this company on a day-to-day basis, and he had tremendous success doing that."

Now, Sekley relies on a senior management team so he can focus on big-picture issues.

"It's important to develop a management team as a company grows," he says. "Bob had embarked on that process, but it's a definite evolution from what had been an entrepreneurial beginning."

Sekley probably spends about 40 percent of his time meeting with managers at various levels, covering a variety of topics. He counts on them to keep him informed about what is going on in every aspect of the business, from the factory floor to the remote locations — something a CEO of a large firm simply can't manage on a day-to-day basis.

"I rely heavily on the management team," he says. "They're the first people to see a problem and they need to be able to react quickly and communicate well up and down the chain of command."

Beyond the everyday issues, Sekley and the senior management team also set the long-term direction for the company. The company has an ongoing strategic plan with a five-year horizon, as well as detailed business plans for each year. The annual plan includes specific information on strategies and budgets for the following year, while the strategic plan focuses on where the company is headed.

"It's where we step away from the day-to-day issues and look at the marketplace to see how we can differentiate ourselves," Sekley says. "What is the message we want to send out and how do we want to position the company for the long-term?"

Besides his managers, Sekley also uses external market data and internal performance numbers to help him ensure that operations run smoothly.

From his experience with several Fortune 500 companies, Sekley became a big believer in using benchmarks to track performance and has incredible amounts of data flowing to his computer everyday, allowing him to check performance for any number of aspects of the business at any time. He compares his company data against others in the industry and also compares each location's data against data from previous years.

"With the advent of information technology, there's an excellent supply of data out there on a real-time basis," Sekley says.

Information flows in on installation times, sales, the effectiveness of marketing and advertising, labor costs and factory performance.

"We have data — and track data — on a real-time basis for every step along the way," he says. "We send it out to all the key decision makers."

For Sekley, on a daily basis he takes a dashboard approach to the data, keeping an eye out for anomalies as he looks at the top level of data. Because he knows the performance levels so well, he can look at the information from a high level and spot problems.

"I hate to use the term 'management by exception,' but essentially I can look at things and know where the problems are," he says. "If the curve starts to change, I can spot it and dig deeper and very quickly see what the problem is."

Employees as Owners

Another important change for Patio Enclosures has been the transition from a single owner to an employee stock ownership plan (ESOP). The process started 10 years ago as a way for Schneider to retire without having to sell the company to an outside investor.

"It's a good succession plan for Bob and it's good for the employees," Sekley says. "He could have made the choice to sell, but Bob really valued the independence of the company."

The company became 100 percent employee-owned on Jan. 1, coinciding with Schneider's retirement. Under the ESOP, employees receive a share of company profits in the form of dividends now, as well as in a retirement program. Any employee that works 1,000 hours a year can take part in the program. The retirement benefits vest after three years of service, so the employee can receive them even if they leave the company in the future.

"It's a very, very powerful concept," Sekley says. "The employees see that what benefits the company benefits them directly."

One of the programs inspired by the ESOP is the "Reduce Our Costs" or "ROC" teams, which are employee groups dedicated to finding ways to save money and increase profitability and share value. Employees have made money-saving suggestions from operations on the factory floor to the use of office supplies.

With 100 percent ownership just being reached earlier this year, Sekley says the company has yet to see the full benefits of the program.

"We've just begun to tap into it," he says. "That pride of ownership is just going to continue to drive the company forward as the employees realize the power of their actions."

 

Executive Summary

Patio Enclosures

Headquarters: Macedonia, Ohio, with more than 40 company-owned locations, franchises and dealers throughout the country
CEO: Kenneth Sekley
2006 projects: 6,000 plus
2006 volume: $85 million
Projected 2007 volume: $85 million
Employees: 750
Founded: 1966
Biggest challenge: Maintaining quality at all of the company's locations while still giving local managers the ability to quickly respond to changing market conditions.
Web site: www.patioenc.com


A Week in the Life

How Patio Enclosures CEO Kenneth Sekley spends his average 60-hour week.

Employee meetings: Meetings with employees at various locations take about 24 hours a week. About a quarter of this time includes informal meetings that happen as Sekley walks around the factory, showroom and offices.

Management meetings: Sekley takes another 24 hours a week to meet with his senior management team, talking about issues such as major challenges the company faces and market opportunities.

Managing information: Sekley spends about 12 hours a week studying the internal sales data and market conditions that comes across his desk. He uses that information to make the day-to-day decisions and long-term plans that keep the company on track.

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