|Finished Basement Co. founder Patrick Condon didn't really enjoy running his company until he got the culture right. Photo by Susan Goddard|
Without the right people and the right culture, a company can't expect to have long-term success.
That's an idea that took Patrick Condon five years to embrace, but doing so has made Finished Basement Co. a $12 million a year firm in just more than a decade in business.
"There are really two tales of this company," says Condon, the company's founder and president. "The first is one where I wasn't actively taking responsibility and the second is one of me realizing this is the very foundation of what makes a company successful."
From the time of the company's founding in 1997, Condon focused on growth. With a business model that centered exclusively on finished basements, he knew the company had to quickly become a leader in what he expected — and what turned out to be — a booming field.
"I really felt that we needed to grow fast because there were going to be other people entering the market," he says. "We grew initially faster than what I was capable of managing. So there's no doubt about that. ... the first five years were very painful."
The problem was that the company was trying to grow without a solid base of employees and Condon initially wanted to be at the $12 million level in only a few years.
"I didn't understand culture and the importance of properly developing a culture, so the culture just sort of happened on its own," he says. "When my emphasis shifted to building a company culture instead of 'We've gotta grow, we've gotta grow,' that's when we really started to grow because I put the attention where it really needed to be."
Condon wanted to create a culture built around collaboration, teamwork and a customer-first mentality. He did that by doing what he likes to call "making the informal formal" — in other words, creating a culture where people buy-in not because they have to but because they want to.
"If you try to mandate culture, it doesn't work," he says. "When it's informal people will accept it, they'll embrace it."
That means making the management team accountable for owning the culture and passing that message to all employees.
"When we did that the whole culture shifted in the company," Condon says. "The difference between coming to work today and when I used to come to work five years ago ... it's 100 times different."
Once the company had started to create a culture, it became obvious that changes had to be made in the company's employees — both existing and new hires.
"A lot of our problems came from poor hiring decisions because we weren't really rigorous in knowing who and what we were hiring," Condon says. "We would sort of hire for skill set and sometimes we'd hire because we needed somebody and there was a warm body. Once we understood the culture, it became so much clearer when we were hiring people if they could potentially be of help."
Once he knew what he wanted the culture to be, he could hire with that in mind. To do that, Condon decided to use the Topgrading philosophy (www.topgrading.com) created by Brad Smart and used by several large companies, including General Electric, Motorola and Microsoft. It's a system that focuses on people, both evaluating current employees and finding new ones.
"The Topgrading interview process really is intense," Condon says. "It took us six months just to get everybody comfortable with it and probably another six months before we became effective with it."
At the same time, the company started addressing and evaluating its current employees using the Topgrading process.
"It's a very open and rigorous grading system so people know exactly where they stand and what they are accountable for and what they need to do," Condon says.
If employees weren't able — or willing — to meet the standards and adapt to the new culture, they had to be replaced. In some cases, they left on their own, and others were let go. Over the course of two years after implementing Topgrading, the company had almost 100 percent employee turnover.
"Our new philosophies and the old guard weren't connecting," Condon says.
By getting the right people in place, the company has also been able to create project teams, a part of the new culture's focus on client satisfaction.
Previously, sales staff and designers would come up with the plans, hand them over to production and production would execute them. Now, though, project managers and designers are involved from the beginning and sell, design and build the project together.
"It used to be we would have one in 10 projects go south," Condon says. "Not that we'd lose money, but we'd have some sort of problem and that would just suck the energy out of the company."
Since the implementation of project teams, the company's customer satisfaction scores have jumped, averaging a 9.5 out of 10 across 10 different areas, with an equal increase in referral business.
"Our scores have just gone through the roof, and that's been a big piece of our growth," Condon says. "Every single client is happy at the end of the job, and I couldn't say that before. I don't think we've made every single client a raving fan, but they're happy."
Condon's long-term vision for the company is to build a national basement finishing company. Along those lines, Finished Basement Co. opened an office in Minnesota's Twin Cities (where Condon attended college) three years ago.
That location has been a great success, something Condon credits to Matt Cook, who runs the Minnesota office and had previously worked in the Denver office.
"I think I got really lucky," Condon says. "He and I really are partners. We're very much on the same page."
On the other hand, the company recently stumbled with a suburban Virginia location, closing it down after about a year in business. It was a strong lesson in the importance of culture, Condon says.
"We hired all new people for that office," he says. "We trained them, but the culture part, I don't know if you can train it. We thought we hired for it, but I think it's something that gets in your blood and takes some time."
The other lesson, Condon says, is that the company won't ever again expand into a "super-hot" market. Although the culture was the most important reason for the location's failure, the company also had trouble finding project managers and trades to install the work.
"Anyone who was worth anything was working for the home builders," he says.
That experience doesn't mean the firm won't continue to expand, but any new offices will be opened with people who have been with the company for a while and with more planning and study of potential markets.
"If we do that, I have no concerns," Condon says. "That was the biggest thing ... we didn't have the right people and we weren't sophisticated enough to have the training to the point where we could just say, 'Here's the manual and here you go.'"
(For more on the challenges of opening new locations, see this month's cover story on p. 18)