A 100-Year-Old Company’s Plan To Reach It’s 200th Anniversary

Bob Whalen, HB Global, LLC

November 16, 2021

Our company, HB Global, provides commercial and residential mechanical, electrical, and plumbing construction, installation, and service. We have been growing for over 100 years and we plan to continue to grow for the benefit of our employee owners for another century—at least.

Founded in 1914 by Herbert Bassett McClure, the company initially grew at a slow and steady pace, becoming a household name as a residential service business in the central Pennsylvania market. From the 1960s through the early 2000s, Bill and Bob McClure led successively with a growth mindset, expanding the business to include commercial contracting.

When I joined the company in 2008, right before the Great Recession, it was a roughly $30 million business. In 2021, we expect to do about $400 million. We average about 10 percent organic growth each year, and we’ve made 18 acquisitions since 2011.

We prioritize growth for two key reasons, and both revolve around our people. First, as a People First, Evergreen® company, we empower our employee owners to make this a great place to work —where they can thrive, embrace opportunity, and develop their careers. Second, we want to create long-term value for our employee owners, providing individuals who work for an HB Global company financial security now and in retirement through our Employee Ownership Stock Plan (ESOP)

Growing A Great Place To Work

Over the course of my career, I’ve been through periods at other organizations during which, whether due to factors within a company or as a result of external market forces, a business was stagnant. And maybe it’s due to my personality, but I have never been happy if I don’t have an opportunity to grow and learn.

I want the same for our team. At HB Global, we want people to feel energized by the dynamic, positive momentum generated by growth. We want to create a company that breeds excitement and energy, a place and a mission that inspires people to contribute each day because they have a collective stake in our success.

Growth is also critical in allowing our organization to continually offer team members new opportunities for challenge in their professional lives, which leads to greater job satisfaction and better overall quality of life. Whether a person is offered a stretch assignment, a new role, or an opportunity to gain expertise in an entirely new area as the company expands, growth allows employees to develop professionally and personally.

Growing To Create Long-Term Value For Employee Owners

We transitioned from private, family ownership to 100 percent ESOP in 2010, and creating long-term value for our employee owners is another significant factor in our desire to grow.

Among the management team, the transition to ESOP instilled a new focus on taking actions that would create value for our employee owners. When we had a stock price and could observe the impact of specific actions on that price, we became hyper-focused on growth. We saw that connection initially on organic growth, and as we started to do acquisitions, because of how the valuation process works with an ESOP, we could actually put a dollar figure on the value that was created from the acquisitions, adding fuel to our fire for growth. To see the impact on an individual’s retirement as the company grows and the value of their stock rises is pretty phenomenal.

Pacing Our Progress

We’ve had a lot of success with acquisitions, and it’s exciting to see the impact of that growth. But we recognize that there is real risk when you start to think you have the Midas touch. That’s about the time you start to have real problems.

We aim to maintain a paced approach to growth in two essential ways. First, we closely manage our debt to EBITDA level. Second, we keep an eye on culture, and we are very intentional about acquiring only companies that align with our values of trust, team, grit, and growth. We put a lot of energy into the due diligence process of each acquisition. We are committed to assessing the values and culture of each potential acquisition. At each step of the process, as a team, we are asking, “is this really going to work post-transaction?”

We don’t have any trouble saying no to a deal if we feel that alignment in values is missing. We’re not in a race to grow for growth’s sake—we want to be sure we’re maintaining the values and culture we’ve built over 100 years.

Navigating The Challenges And Change That Come With Growth

I don't think there's any doubt that while we've been growing through acquisitions for 10 years, we are still learning every day and balancing our desire for growth with our awareness of potential pressures and pitfalls. We’re asking ourselves all the time, what is that optimal growth level? How much can we handle?

In our current discussions, the biggest challenge we are navigating is the optimal level of autonomy among our divisions and how we will develop and scale our leadership and operations team as we grow. We have eight divisions operating in eight states and in the U.S. Virgin Islands, and we are thinking through how much institutional control we want to implement over those divisions.

I have served big bureaucratic organizations and have seen the plus side of more corporate governance as well as the downside. Today, we have a fairly small team at our operational headquarters, and I have a tendency to err on the side of caution when adding more managerial process to what we're doing. But I also know that our operations team wants us to be world class and make an impact as we grow, so we are consistently debating where we should implement more structure or process and how much to centralize as we grow.

Leading Growth

As an Evergreen® leader, I’m grateful for the flexibility of a long-term, paced approach to growth. We want HB Global to be around 100 years from now, and I’m going to keep leading with that long-term time horizon in mind. As we continue to grow, my goal is to empower our team to take the actions that will maximize the experience of our employee owners and keep our values at the core.

Bob Whalen is President and CEO of HB Global, LLC.

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