Teaching Leadership Skills for Success at Work and in Life
At Ayers, an Evergreen® company, an unskilled laborer with minimal education and no management skills can advance, in less than five years, to managing and leading a production team.
There are two critical ingredients for this kind of rapid progress: an eagerness and a willingness to learn, and a grounding in the values of our purpose-driven company. We can’t teach the former, but we can teach the latter, and we do.
In 2019, my son Zack, who is currently our VP of Operations, had just completed a masters-level course in Entrepreneurship and we were looking for ways to handle the pressures of constant hiring and training for our very niche market as we scaled the company. Zack’s experience in the program gave us cause to discuss the leadership lessons he had been studying, and to be reminded how much good leadership is actually grounded in simple skills and old-fashioned values. We came up with the idea of creating a course at Ayers to teach employees these basic life and work skills.
I am a fan of Patrick Lencioni’s The Ideal Team Player, and knew that if we could get people who were “hungry, humble, and smart,” we could tap their potential and help them, and us, create our next line of supervisors and even managers.
With Zack as my partner, we created our Leadership Immersion program. The first course was 13 weeks long, and the homework before the first class was to read Lencioni’s book and do some reflective writing on Ayers’ values and purpose. My son and I taught it ourselves, and we had our whole management team go through it with the first cohort. The lessons were focused on leadership and life skills that not only make employees better leaders, but also better people.
Our curriculum is about professionalism and instilling values and habits which underpin effective leadership. We ask that students come dressed professionally and most wear a coat and tie. Lessons include basics such as time management, success principles, and being a solid team player. But they also include how to run a small team, how to be a good neighbor or spouse, how to budget, and how to be better with money.
Each week, there is homework, reflection, and preparation to do. Joining the program is a significant undertaking and this fact alone helps cultivate a sense of responsibility and dedication to quality that are core values of both Ayers and effective leadership in general. It encourages participants to see themselves in a new light, and to aspire to something greater.
Each session, we admit eight people. We’ve found that a small group allows for more meaningful group discussions, which make up about 50% of the class time. And it doesn’t take too many people out of their usual jobs and leave us overly shorthanded. In terms of who gets into the program, we target junior leaders, most without any education beyond high school, who have been with us for about a year. It feels important to have time to get to know them as human beings, and once we have identified the people with the willingness, ambition, and disposition to grow, we invite them into the course.
For the length of the course, which has grown to 17 weeks, they spend every Friday, from 9am to 3:30pm, in class. Why 17 weeks? The objective of this course is to transform the students into more effective employees and people, and conventional wisdom tells us it takes 17 weeks to create a new habit!
At the end of each course, we host a celebration, and this is the greatest joy for me. Everybody brings their spouse or significant other and we share the growth that has resulted from the course. Typically, not only do course members share how they’ve changed internally as people, but also their families share how much their lives have changed at home. It’s quite profound and can be life changing. Although we are clear that joining the program does not guarantee a promotion, many of them will end up being promoted.
Creating this course has meant a big investment. It’s expensive; after people and the benefits program, it’s our biggest expense. But it’s paying off in spades. Especially in today’s tight labor market, investing in our people has never proven more worthwhile. We know our employees who have been through this program are skilled, aligned with our purpose and values, and exceptional team players. It’s one of the best investments we’ve ever made.
Zack still runs the program, but increasingly, the classes are taught by members of the management team who went through the course in its first cycle. Zach now sits in the back and observes, which I love because that’s a sign it’s working. We are producing leaders who produce leaders.
It’s been so successful in fact, that we’ve just announced a new initiative that is an extension of the Leadership Immersion program. In February 2023, we will launch our first Leadership Immersion Master class for employees ready to look to the next level of leadership within the company.
For anyone thinking about offering a program like this, I think there are two important things to keep in mind. First, there has to be a multiple-year commitment. It takes time to dial in a program that’s a fit for your team. Secondly, as a leadership training program, the buy-in has to start right from the top. Even now, I still attend the class for the first 30 minutes every week, share a story, and draw a connection to the content of the lesson for the day. With this level of commitment, there is no limit to how high that laborer-turned-manager might climb.
Win the Talent War by Investing in People First
Amid the Great Resignation and an overheated talent war we haven’t seen in decades, finding ways to put People First is a vexing question for entrepreneurs in almost every industry. Before I share how we’ve answered it in our Evergreen company, it makes sense to start with a brief history.
My father started Hoffmann Brothers back in 1988. He was a mechanical engineer at the time, working here in St. Louis for Anheuser-Busch, and he worked closely with a mechanical contractor to air condition several of their facilities. He really loved the exposure to the HVAC space. He’d wanted to get in business for himself for some time, so he put in his two-week notice with Anheuser-Busch, joined a small, four-person heating and cooling shop, and enrolled in a local trade school at night—making him the first mechanical engineer with a professional engineer license to enroll in this trade school and complete the program. From the start, the business focused on delivering superior service, and my father realized early on that in order to deliver maximum value, it was essential to attract—and equally important, retain—the right people. The roots of our People First philosophy were there right from the beginning.
My chapter at Hoffmann Brothers began in 2016, when I left the Marine Corps and used the G.I. Bill to attend business school. After graduating, I joined the company along with my brother, who is also a mechanical engineer. As a Marine, I learned what it means to be a servant leader. I was inspired by Simon Sinek's Leaders Eat Last, and I hadn’t just read about it, I had gotten to use it and develop my skills through my time as a Marine. As a result, when I stepped out of the Marines and entered our family business, I had an acute sense of the importance of taking care of one’s team.
During my transition from the Marine Corps to the for-profit world, I quickly learned that the latter does not overly concern itself with the personal lives of team members. Except perhaps when personal lives begin to have a negative effect on productivity in the workplace, “Leave your problems at the door,” whether stated or implied, is a mantra familiar to many businesses.
In the Marine Corps, being “mission ready” meant that your Marines were fully prepared for what was to come, both with respect to the professional competencies that have been honed through rigorous training, and with respect to personal affairs on the home front. As a leader of Marines, I loved that my role meant that I was holistically responsible for the people I led. Leaders of high-performing private businesses must take a similar approach if they wish to persevere in the face of the talent challenges that we face in 2022.
Compensation, Benefits, and Culture
Guided by this mindset, when my brother and I joined the company, we doubled down our father’s value of putting our people first. What does that look like? For starters, we’ve incorporated some traditional techniques, like offering competitive salaries and benefits, but we’ve taken them to the next level. We pay 100% of health insurance for employees and their entire families. Among our peer group in the national market, we are the only company that does this. For family coverage, that's over $16,000 per year per employee. We also offer an 8% 401(k) match and a generous paid vacation, starting on day one. These benefits are expensive, but that's what gets people talking and helps us attract and retain the best talent in the market.
We're a service business, which traditionally means demanding, on-call, 24-hour-service work schedules. But we want to protect our employees’ weekends and late hours as well, so we did something counterintuitive in our industry: we eliminated 24-hour on-call and scheduled calls on Sundays.
As we evaluate expansion markets in new geographies, we consider the opportunity created by the current pay and benefit landscape within a given market. For example, given that our largest constraint to growth continues to be access to the best and brightest talent in the skilled trades, as we look for opportunities to expand, we target markets where the benefits we can offer are not currently offered by existing employers, like our 100% paid health benefits for employees and families. This approach has allowed us to quickly build a strong reputation among the candidate pool in new markets, and therefore we are able to rapidly scale with team members who can meet our high quality and customer service standard.
Internal Talent Pipeline
As the talent pool of skilled trade workers has become increasingly tight, we are asking ourselves the same question a lot of businesses are asking: How do you find really good people? To address this, we’ve taken our People First mindset a step further. Over the past two decades, our society has encouraged people to attend four-year universities, where they walk away up to $150,000 in debt, rather than pursue trade careers that pay incredibly well and come with a significantly lower cost of education. But even the cost of trade school, which can be around $20,000, is prohibitive for some, especially for 30- and 40-somethings with families who want to switch careers. The result is that there are not enough HVAC technicians, plumbers, or electricians in the country right now. Rather than fight for a finite number of workers, we’re digging our own well.
How? We are building our own school. Our approach is simple: we've identified a minimum set of competencies that are necessary to create a technician capable of producing independently. If you come to our school, we will equip you with that set of competencies and we are going to do that in just 16 weeks. And we're going to pay you $18/hour while you're doing it. When you graduate, you're on the path to an $80,000 or $90,000 job within four years. While it appears to be an expensive investment, I find it a highly attractive program for finding, developing, and retaining great new team members who I hope will make a career out of working at Hoffmann Brothers.
Another part of this initiative targets employees at the leadership level. In 2022, we are investing heavily in leadership development in order to allow leaders at every level of our business to reach their full potential. Our leadership program was developed through a comprehensive design process, which began with the identification of our ‘core business drivers.’ We then mapped these core business drivers to a specific set of leadership competencies at all levels within our organization. For example, the “executive” leadership competency model will look different than our “field manager” leadership competency model. Having identified the competencies, we can now shift our focus to curriculum design and delivery. It took our field managers over ten years to become masters of their trade, and as they transition to their new leadership roles, we must be just as intentional about their leadership development as we have been about their technical skills progression.
Signs of Success
We are, of course, interested in evaluating how well our efforts and investments are working, and how they are paying off. On the employee satisfaction side, the statistic I am most proud of is our retention rate. Pre-COVID, our retention rate was 96%. Despite all the madness in the job market now, we’re still at 88%. In light of the challenges we’re facing, including the intense competition for talent, we feel great about that number.
In 2016, we had 50-55 employees and we were a $10 million business. Today, we have expanded into Nashville and grown locally, we have 300 employees, and we ended 2021 as a $55 million business. We’ve experienced 30% organic growth each year since 2016, and in 2022 we are budgeted to reach $78 million across our St Louis and Nashville markets. It appears to be working.
Evergreen® Takeaways
What we know and what we have learned as an Evergreen company is that employees today are not just looking to clock in and out and collect a paycheck. There must be Purpose behind the work that they are doing and the company that employs them. They have to feel that they are part of a collective effort, working in a place that cares about them and develops them, and where they can make a difference.
Every business in the world likes to say they’re People First. It’s easy to say. Find me a business that doesn’t say it. But how does People First actually show up in your business? For us, it’s several good, caring ideas executed well.
Cogitate and Celebrate Your Purpose
I decided to go back to the basics for the first Evergreen Journal® of 2022 and examine what sustains our vital community of over 220 members. Our membership represents companies from 32 industries operating under the leadership of CEOs and Founders determined to make the world a better place. What I found is that the common denominator of these leaders is their unwavering dedication to the Evergreen 7Ps® principles of Purpose, Perseverance, People First, Private, Profit, Paced Growth and Pragmatic Innovation. Therefore, I think it is fitting for this first missive of the year to start at the beginning, with the principle of Purpose.
Purpose. It is what inspired me to embark on a learning journey nine years ago. It is what guided me to assemble a group of like-minded CEOs and Founders for the first Tugboat Institute® Summit in 2013. It is the cornerstone of the Evergreen 7Ps principles. And, I believe, it is the North Star to which we need to look as we review the past year and embrace the new one.
When COVID-19 disrupted the world in 2020, our membership immediately implemented three key strategies—protecting the financial integrity of their business, keeping their teams safe and as intact as possible, and using pragmatic innovation to flip from defense to offense. These same pillars sustained them through 2021 as the ripples of the pandemic caused crippling interruptions in the supply chain, hiring shortages, and inflation. And as fatigue sets in from the havoc brought on by the latest COVID strain, it is the underlying purpose of these companies that will continue to guide their leaders and teams through these extraordinary circumstances and beyond.
This adherence to purpose was perfectly illustrated during our 9th Tugboat Institute Exemplar Visit to Edward Jones in October 2021. Penny Pennington, the firm’s sixth managing partner and a fellow Tugboat Institute member, personally hosted this deep dive into an Evergreen® company that has been in business for 100 years as of this month. During the experience, Penny shared her primary leadership objective to move the century-old company from a mission-driven firm to a purpose-driven one, where Edward Jones’ purpose sits at the headwaters of the firm’s culture, strategy, trade-offs, and execution.
This kind of intimate access to a like-minded peer running an Evergreen company that spans two-thirds of the US is what educates and emboldens our members as they build their own business with the intention to have it last beyond their lifetime. And it is the kind of unique experience we expect to receive this coming October, when the membership travels to Salt Lake City for the 10th Tugboat Institute Exemplar Visit at O.C. Tanner.
Established in 1927, O.C. Tanner is a global leader in software and services that improve workplace cultures. Its Culture Cloud employee recognition platform improves the employee experience, boosts productivity, and increases employee retention. Their annual Global Culture Report is an in-depth look into workplace issues based on data gathered from 21 countries. The research from this annual report provides businesses with critical insights and relevant tools for navigating an ever-evolving, post-pandemic work environment—such as the “Great Resignation” phenomenon. Findings from their past reports point to the fact that, “Employees innately desire to connect to something bigger, something more important than themselves. Most don’t come to work just for a paycheck. They don’t work passionately towards a goal that is only about profit maximization. They come to make an impact, help others, and change the world.”
I, too, believe that Purpose is a touchstone, not only for employees, but also for Evergreen leaders, their families, their shareholders, and the communities that surround their businesses. Purpose is more important than any one individual and its end contribution to the world is so much more than one company having one fiscally good year.
As we enter a new year, I encourage you to take a moment and go back to the beginning. Reflect on your company’s Evergreen Purpose. Is it articulated clearly and understood deeply within your organization? Is it a fundamental part of your culture? Is it experienced by the people inside and outside of your business? Is it celebrated?
Dave Whorton is the Founder and CEO of Tugboat Institute.
Partners At Work & Home: Insight Into Building An Evergreen Company With Your Spouse
When Dan and Tracey Pilone made the decision to cofound their software company, Element 84, they had a good sense of how their skills and character traits would complement one another in a work setting.
The couple had co-written two textbooks—one on algebra (Tracey has master’s degree in education) and one on iPhone applications (Dan’s a computer scientist)—and that experience offered an early glimpse into their professional compatibility.
“The experience of co-authoring the books was really a microcosm of everything that came after,” Dan says. “For both books, we put a plan together, executed the project, and were able to see how our work habits and patterns allowed us to be an effective team.”
Where Dan admits to going all in on an idea from the beginning and being prone to all-nighters, Tracey is more cautious, methodical, and process oriented. That balance has served the couple well over the 11 years they have led Element 84, growing the company from five to over 50 employees.
Today, Tracey serves as President, leading business operations, and Dan is CEO/CTO, running the technology side of the company. The couple has two teenage children, and they are continually navigating the shared responsibilities of business and family. As they reflect on their decision to found and lead a company together, both are aware of the lessons they’ve learned the hard way in creating a successful partnership at home and at work—and the gifts of the experience.
Two Different Approaches To Risk Have Promoted Sustained Growth
Dan is more risk tolerant than Tracey is and says that he generally approaches things with the perspective of, ‘how hard could it be?’. He gets passionate about projects and tends to be ready to jump right in.
Tracey’s instinct to ask the important questions and think through the long-term consequences of decisions is an important counter to Dan’s enthusiasm. When there's a new opportunity that they want to go after together, and Dan is ready to dive in, Tracey will ask: “Is this sustainable? How are we going to grow this?” She lives in the details of execution.
In describing the benefit of the balanced approach of their leadership, Dan says, “I like thinking of us as the balloon and the string—I’m the balloon and Tracey is the string, grounding us. That partnership dynamic lets me reach a little further than I would be able to otherwise, and she probably executes more caution than she might without my buoyancy. Together, at the end of the day, we end up somewhere in the middle, which allows us to continually drive the company forward in a sustainable way.”
Creating Clear Boundaries Around Work And Home Life is Essential
Dan and Tracey have worked to create clear guardrails around work and home life, a lesson they initially learned the hard way.
The couple learned early on that they would need to establish boundaries around bringing work into life at home; otherwise, work would consume them. Over time, they found that designating specific physical spaces at home where they would discuss work (in their home office or outside) and keeping the other areas in their home dedicated to personal and family life created a helpful separation.
Early experience also led to a discussion around how and when to introduce potentially stress-inducing work topics that arise after hours. “Tracey has had to tell me to stop reviewing contracts and emails on my iPad in bed because if I see something that’s newsworthy, she’s going to see it all over my face, which is not a good thing at 11 p.m.” If something comes up after the couple is home, they will often email the other person so it can be handled the next day instead of starting a conversation.
One practice that has helped Dan and Tracey avoid spillover of work into home life has been to schedule a weekly standing meeting. While that might be obvious for co-founders who don’t live together, creating scheduled, structured time allows them to compartmentalize and set an effective agenda. Instead of a continual, ongoing conversation about work that can seep into family time, they have established discipline that makes those conversations more efficient and leads to more effective planning and action.
Setting clear expectations around family travel to ensure they are actually able to have time off together has also been an important lesson. After one week-long vacation early on that Tracey describes as “a train wreck,” in which they both worked 40 hours, the couple now plans ahead to set clear guidelines for if and how work will factor. If Dan is planning to check work email early each day, he’ll let Tracey know, and Tracey will be clear about what, if any, information she wants to be made aware of during the time away.
Modeling Effective, Transparent Communication Has Enhanced Company Culture
As a couple, Dan and Tracey appreciate engaging in respectful debate and offering one another constructive feedback, which they have modeled in team discussions from the beginning. For Dan, receiving feedback and engaging in productive debate is actually key to his decision-making process.
“Tracey and I interact this way with each other in meetings—as we do at home—openly disagreeing at times but always open to the other’s perspective. I think people who are new to the team sometimes sit back and wonder what’s going to happen, but what they ultimately realize is that it’s a productive dynamic at our company, and setting that precedent offers other people in the company permission to engage in that way. We’ve modeled that we can disagree, but at the end of the day, we’re going to reach consensus and respect and support the final decision.”
In fact, if the couple cannot reach consensus about a decision, they engage the leadership team in the discussion, providing valuable objective perspective. Developing a leadership team that can serve in that capacity and help provide support and expertise across the company has been essential in growing the business he and Tracey started as a team of two.
In addition to ensuring the leadership team plays a role in decision making, Dan and Tracey have also implemented a culture and specific processes to make sure employees feel safe to offer feedback or to address issues that might arise. The company has an email application that allows for anonymous suggestions or concerns, and they conduct an annual survey managed by an external provider, which creates a formal feedback loop on a regular cadence. In addition to those formal processes, both Dan and Tracey have made themselves available and open to receiving feedback about the other and addressing any concerns that arise.
Shared Victories And Flexible Work Enhance Family Life
While there are inevitable challenges in sharing a company and a family, Tracey says that the benefits and joy of the experience outweigh the challenges. “When we started the company, our kids were young. I was freelancing at the time, and I wanted to maintain a flexible schedule, so we baked that into the company. I think our kids benefitted from that early choice, and there’s no way I would have had the career I’ve shaped for myself without having started our own company.”
The benefit of being a flexible, present parent has been enhanced by the experience of celebrating company wins as a family. When the company earns a new contract or experiences another success, bringing that accomplishment home to celebrate together is a special, shared experience.
Dan says that building something together has been a gift. “I could not have created Element 84 the way that we did it with anybody else. To be able to work on this thing that you care passionately about, and which takes so much energy, with my best friend has been amazing. I could not have been as invested in it with anybody else. It just wouldn't be the same.”
Dan and Tracey Pilone are Co-founders of Element 84, Inc.
Tugboat Institute 5HQ @Clase Azul
When the global pandemic hit in March of 2020, it was clear that Tugboat Institute® needed to reimagine how members could safely connect and learn from each other. Armed with a little pragmatic innovation, the Tugboat Institute @5HQ series was launched in October 2020. This unique program was a twist on our traditional Fall Exemplar visit. Instead of diving deep into one Evergreen® company, members had the ability to choose a more intimate experience with one of five companies based in five different regions of the US, with morning presentations live streamed to those who could not join in person. More importantly, each of the five host companies was run by a Tugboat Institute member—delivering on the intention to create a rich, robust, and relatable peer-to-peer experience while honoring health and safety protocols.
Each participating company opened their doors to lay bare their histories, cultures, best practices, missteps, key learnings and long-term goals. In return, hosts received the benefits of honest, straightforward feedback from fellow tribe members along with valuable insight on potential blind spots through Tugboat Brain Trust exercises.
The final @5HQ visit took place with Clase Azul in New York on November 19, 2021. Technically the festivities started the night before with a gourmet dinner hosted by Clase Azul Founder and CEO, Arturo Lomeli, and President, Juan Sanchez. Each course of the meal was paired with a Clase Azul premium tequila and a colorful telling of the spirit’s backstory. It was a once-in-a-lifetime experience.
The following day Arturo and Juan warmly welcomed Tugboat Institute members in-person and virtually to their new Clase Azul Loft in Brooklyn—a first as the space had not yet been opened to the public. The schedule included the highs and lows of Arturo’s personal journey starting the company in 1997, the pivotal decision to partner with his brother-in-law, Juan, in 2002 and the constant evolution of the Clase Azul brand that currently includes six companies—alcoholic beverage production, two import companies, an artisanal ceramic factory, a non-profit organization, and a third-division football team.
Throughout the day, Arturo and Juan candidly discussed their audacious goal to build the first Mexican luxury house. They also shared the secret to their successful partnership—trust and balance. Arturo sets the "what" and Juan sets the "when". According to Arturo, “We maximize the strengths of each other.” Juan took a more philosophical approach by comparing their relationship to the ancient Chinese yin and yang concept—or as Juan puts it, “yin and Juan”. Regardless of the description, it was clear that both men were deeply aligned and commitment to their company’s mission—to share happiness and captivate the world through the magic of Mexican culture.
We are grateful to all the members who hosted and participated in the Tugboat Institute @5HQ series. The exchange of knowledge, the support and the comradery that is at the heart of all Tugboat Institute events was particularly present during the behind-the-scenes look at these five member companies. A perfect example of Evergreen leaders at their best. Salut!
Susanne Lally is Director of Marketing and Partnerships at Tugboat Institute
A 100-Year-Old Company’s Plan To Reach Its 200th Anniversary
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.
Tugboat Institute @Edward Jones: Trusted Relationships
The Tugboat Institute® tribe gathered in St. Louis last week for Tugboat Institute @Edward Jones. This was our 9th Fall Exemplar visit and offered an in-person as well as virtual experience to more than 100 Evergreen® CEOs. Edward Jones is an Evergreen company with $1.7 trillion of assets under care. Their 19,000 financial advisors serve over 7 million clients from 15,000 offices located in approximately two-thirds of counties in the US and all 10 provinces in Canada.
Edward Jones was established in January 1922 by Edward D. Jones—known to most in the firm as Mr. Jones Sr.—who devoutly believed that all people who work for him deserved respect and fairness. He and his son, Ted, who joined the firm in 1948 as its 18th broker, shared an abiding passion for the business they were creating.
In contrast to their competitors in the securities industry that focused on cities with offices teaming with brokers, Ted had the visionary idea of serving farmers, small businesses and families in small American towns. He knew they had financial resources but were overlooked by the traditional investment companies. Peter Drucker would later call this “a market in contemplation.” To serve these people, Ted developed the idea of a single financial advisor in each small town and encouraged every advisor to knock on doors introducing oneself personally. This was a groundbreaking business model and sparked other disruptive innovations that Edward Jones follows to this day.
In 1972, John Bachmann, Ted’s successor, wrote a short memo that redefined the course of the company with the forward-thinking concept of expanding from their current 100 offices to 1,000 while still holding true to the core value of providing exceptional service to clients in rural markets. John ended his revolutionary memo with the missive to, “Act boldly now.” In fact, at the opening of its 1,000th branch in 1986, John raised the bar again, announcing his new Big Hairy Audacious Goal (BHAG) to establish 10,000 offices across North America and continue the tradition of building hyper local business—one financial advisor at a time.
John served as the third managing partner of the firm for an unprecedented 24 years. The position would later be filled by Doug Hill and then Jim Weddle. Each played a critical role in the development and success of the firm. For our exemplar visit, we had the privilege to have the firm’s sixth managing partner in just under 100 years host the experience—Penny Pennington.
Penny assumed the role in 2019 and shared with our members her view of a managing partner that remains consistent with her predecessors, “I didn’t take this job to be a caretaker.” Rather she is raising the ambition of Edward Jones by moving the company from a mission-driven firm to a purpose-driven one—where Edward Jones’ purpose sits at the headwaters of the firm’s culture, strategy, trade-offs, and execution. Along with this shift, the company is taking a “human centered” approached to complete wealth management for their clients.
During a fireside chat with Dave Whorton that kicked off the exemplar, Penny was clear that the success of Edward Jones is not accidental or inevitable. This candid conversation also allowed Penny to share in-depth her life story, the history of Edward Jones, and how the Evergreen 7Ps® principles come to life at the firm.
After the fireside chat, executives and leaders from Edward Jones gave a series of presentations on Evergreen practices instituted at the company, followed by frank Q&A sessions. The first talk focused on Purpose, and how Edward Jones’ purpose is the north star, and the “why” for the firm. Next the team presented the cultural and people practices necessary to make the purpose a reality. Their presentation expounded on the 5 mindsets that are integral to the company: lead by example, establish a place of belonging, continue learning, make effective decisions and grow community impact. As Penny eloquently put it during the Q&A after this presentation, “Being better versions of ourselves as human beings allows us to be better for our clients.”
Additional sessions included discussions on pragmatic innovation, the strategic advantages of ownership, the investment philosophy of Edward Jones, creating leaders and leadership capacity, the elevation of ethics beyond mandatory compliance, and the crucial role of volunteering and outreach projects that make a difference in the communities where associates live and work. Our membership was also treated to a talk by the firm’s fifth managing partner, Jim Weddle, who shared one of his greatest life lessons, “What got you here might not keep you here or serve you best.”
Those who attended were gifted with a deeper understanding that Edward Jones is a purpose-driven, dynamic, adaptive, learning organization that will continue to thrive and positively impact clients, colleagues, communities and society. It is this sentiment that makes Edward Jones exceptional and one also shared by the 200+ members of Tugboat Institute that commit every day to building leading and lasting Evergreen® companies.
Susanne Lally is Director of Marketing and Partnerships at Tugboat Institute.
How The Great Recession Helped Us Survive The Pandemic
When the Great Recession hit in 2008, I was five years into my career at Lloyd Companies, the full-service real estate firm founded by my aunt and uncle, Pat and Craig Lloyd, in Sioux Falls, South Dakota in 1972. As 2008 approached, we were coming off of our best years ever, having evolved to offer development, real estate, construction, and property management.
But the Great Recession would force a reckoning for our company and prompt us to make significant changes—changes that would ultimately allow us to survive through the recent pandemic as well. There’s no doubt in my mind that navigating that intense period strengthened our business, helping to ensure the long-term sustainability of our company.
Partnership Parameters: Good Partners Want Good Partners
My uncle Craig loves people and appreciates nothing more than seeing others succeed. As he and Pat built the business, he enjoyed working with friends and acquaintances in the community to develop properties. He sealed deals with a handshake, and he always honored his obligations.
But in 2008, when many people were overleveraged and without the cash reserves to uphold their obligations, we found ourselves scrambling to satisfy the banks when called to make up partners’ debts as well as our own. We depleted our cash reserves and stretched ourselves thin. It was clear that we needed to take a hard look at how we identify more financially conservative partners and implement best practices around our operating agreements.
That awakening prompted us to execute a process of due diligence in our operating agreements, wherein, together with our banks, we work to vet potential partners. This allows us to approach each deal with sound financial footing and assurance of a shared, mutual responsibility. Having seen how quickly things can fall apart in the face a financial crisis, we added critical clauses and language to formalize agreements and structure terms to ensure that each partner will be protected in worst-case scenarios.
In the years since, as we’ve developed projects with these guidelines in place, the process has been affirming. The reality is, good partners want good partners, and the upfront work to ensure a healthy partnership leads to long-term success and good will.
In addition to key learnings around partnerships, the drain on our cash during that period focused our attention on the importance of significant cash reserves. As property developers, we’re not averse to risk, and there were times in the past when we had operated from a cash-poor position, but the Great Recession provided a view into the potentially dire consequences to businesses that weren’t able to pull through due to a lack of cash. Having experienced that impact, we committed to maintaining a minimum of three months of operating cash on hand to be able to pay our people and maintain normal business operations should we have completely exhausted our emergency reserves and have no incoming revenue.
Planning and Process: Building Structures for Long-term Success
As we navigated the impact of the Great Recession on our bottom line and implemented key guardrails to protect the business moving forward, the need for defined leadership and strategic planning also became clear. We saw our industry hit hard, and we understood that if we wanted to build a sustainable business for the long-term, we needed to plan for that future.
Craig had spent years with his fingers in all aspects of the business—the visionary founder who still managed all divisions. Through 2008-2009, we felt the strain of that model. We were running really thin. Pretty soon, that became unsustainable. Craig was essentially managing all divisions, but he recognized at that point that it would be necessary to install key leaders to be accountable for each division and help guide us through this tough period. Having served in a variety of positions up to that point, I was given the opportunity to become the head of the construction division, my first key leadership role.
As we began to develop leadership of the various divisions, we also saw the need for strategy that existed outside the founder’s head and a clear plan for succession. That recognition led to the first strategic planning efforts in the company, in which we developed a seven-year plan to build out leadership structure and plan for my succeeding Craig as CEO in 2015. Craig’s daughter, my cousin Christie, stepped away from an operational role in property management to lead family governance efforts at the same time, which led to the creation of our advisory board, among other key planning efforts.
Pandemic: Preparation and Purpose
Those intense years of effort responding to the lessons of the Great Recession brought significant change to Lloyd Companies. We are now a team of 230 people with nearly $1 billion in assets under management in three offices and two states. We have a senior leadership team of nine and managers in place across seven divisions.
The development of that team, the formalization of many operational and partnership processes, and the commitment to cash reserves all proved essential in seeing us through the recent pandemic. While there were significant differences in the way the most recent period of challenge affected our business, having the security of cash on hand, resilient leadership, and reliable partners provided assurance that we would be able to care for our team, support our customers, and meet our financial obligations.
While I believe all of those changes have been and will continue to be factors in our sustainability, I think it’s our core value of long-term relationships—internally and externally—that has been, and will remain, the thing that carries us forward.
When our team was faced with the immediate impact of the pandemic on the business and on their personal lives, we moved ahead to operate from that foundational value to serve customers and support one another. Because if there’s any lesson to be gleaned from times of challenge, it’s this: you will typically not be judged by your character, demeanor, abilities, or limitations during the good times; however, your actions and the way in which you act will be highly scrutinized in the toughest of times. Fortunately, 2021 will be the best year in the history of the company.
Chris Thorkelson is President and CEO of Lloyd Companies.
From $1 A Day To CEO: A Remarkable Entrepreneurial Journey
I was born in a small town in Northern India, about 100 miles from Delhi. I lost my father when I was two-and-a-half, and my mother raised myself and my four sisters on her own from that point forward. She put what she could on the table through sewing work and rent from a small shop my father had owned, and we survived on about $1 a day.
From my earliest memories, I was well aware that as the only male child in our family, it would be my responsibility to provide for my mother and my sisters. Any hopes of rising up from poverty were on my shoulders. When I reflect on my experience, I see the childhood that was lost to me. I see the challenge into which I was born. But at the time, I just put my head down and did what I had to do. Aware of my need to be the breadwinner, by the time I was about 10, I became focused on that role. I thought to myself, okay, if that's how my life is going to be, then I need to perform. I need to produce results so that my family can survive.
The sometimes painful and challenging years that followed, as I made my way through childhood, pursued my education, entered into the professional world, and ultimately founded a company of my own, taught me that when you go through difficult times, you can become revengeful, or you can become resourceful. I always had the awareness in my heart and in my mind, that though I was enduring challenge life could be better.
From that awareness grew a commitment to create abundance—for my family and for others. I understood that people who experience scarcity, who don’t have enough food on the table, struggle not just for practical survival but to be kind and to experience joy and peace. And so, from childhood, I moved toward opportunity with one question in mind: How can I elevate others? This Purpose has steered me through pivotal choices and experiences in my life’s journey and now guides my Evergreen® company.
The first step toward opportunity—for me and for my family—was my realization that to move up and out, I needed an inroad to acceptance by my peers and my community. I was bullied at school and had few friends, and I was intensely aware of the need to overcome that isolation and become valued if I was going to make my way in the world.
The game of cricket offered me my first lessons in earning respect—and how that respect would create opportunity to elevate myself and others. Initially, I had no skills, and no equipment of my own, and other kids wouldn’t let me play. But I persevered, improved, and produced great results for the team. We won championships, and I won respect. With that respect came the opportunity to carry people along with me, to raise others up.
Success on the cricket field, alongside academic honors that led to tutoring work and brought income to our family, helped propel me forward in my small community, but I faced other challenges when I left home. At 15, I left our town and spent two years at a junior college that was unaccredited, wasting time and incurring debt that was a burden on my family. I hadn’t done the research to understand the system, and I returned home feeling defeated.
That was a dark period, but it offered an important lesson: falling short is a part of life; keeping that shortfall from becoming a failure is the only way to survive. As I had on the playground, on the cricket field, and in the classroom, I said to myself: I’ll do better next time. If I don’t try harder, I won’t get a chance to play. If I don't get a good score on this test, people will not respect me. I knew I had to make things happen for myself to be able to fulfill my dream of creating abundance for others. Failure was not an option.
I left home for a second time at 17 and spent three years at a different junior college. I worked incredibly hard and earned entrance to the most prestigious engineering university in India—National Institute of Technology. I also met my wife, Vijju, the love of my life, in those years.
Having spent what added up to five years in junior college, I entered into university a couple of years older than most of my peers. While I had considered those early years wasted, I realized in that setting that the challenge and life experience I had lived through had in fact offered me a gift of hard-earned wisdom. In the university setting, I had the opportunity to share that gift as a mentor to younger students. I had entirely lacked mentors in my own life, and I was happy to have the opportunity to provide support and guidance to others who might feel alone.
With my degree in hand, I left university intent on finally fulfilling my responsibility to my family and my commitment to helping others. I took my first job with the intent to pay off my family’s debts, marry, and move toward the possibility of entrepreneurship. It was always in my mind that starting my own business would provide the path to creating jobs, and thereby abundance, for others, and the potential to take that step drove me forward.
With that goal in mind, I initially had no intention of moving to the U.S., but three years after I graduated, a recruiter offered me the opportunity to come to the U.S. I saw the offer as a chance to learn and grow, to gain knowledge that could potentially expedite my entrepreneurial dream.
In March 1999, I landed in L.A. with a suitcase and $120 in my pocket and was hired by HP in Boise, Idaho a month later. I spent six years in Boise, honing my skills and developing technology. Vijju joined me shortly after I was hired by HP, and we built a nice life. But I kept thinking that while I had achieved my goal of lifting my family up and creating abundance for myself, I hadn’t yet given back to others in the way I had always envisioned. To do that, I needed managerial experience to move further ahead, to understand how to develop people and create more opportunity.
I took a position leading an HP team in India, learning key lessons around developing people—and affirming some aspects of management I knew to be true. Specifically, my time in India confirmed my understanding that people don’t leave companies, they leave people. As a leader, I committed to showing up for my team and to taking a deep interest in their work, their lives, and their families. I knew that if people understand that you genuinely care for them, they will follow you. If you use them as a commodity, they will stay as long as they have no choice, but they will leave as soon as they have a better offer.
In 2009, the time was right to take those lessons and my long-held passion for entrepreneurship and build a business. Together with a few former HP colleagues and a long-time friend, we founded In Time Tec, a software development company headquartered in Boise. Our shared expertise in software products and services offers clients meaningful software solutions, but from day one the business was created first and foremost as a platform for developing people and contributing to the world. Our Purpose, from the beginning, has been creating abundance; we just happen to build software.
Today, In Time Tec employs 650 people in the U.S. and India, and we continue to grow through our own profits for the purpose of creating jobs and developing people. We bring people together to serve clients with a shared value system based on trust, transparency, integrity, and leadership. What excites me as we grow is the opportunity that growth provides to help people find peace and happiness, joy, and self-expression.
As I look ahead, I’m more focused than ever on developing people. I spend significant time mentoring our team and educating myself in business and personal development to continue to build our culture of learning and offer opportunity to our team. I’m moving toward becoming more of a “Chief Mentoring Officer,” rather than Chief Executive Officer, but I'm not in a hurry, and I am not working on a set timeline. I want to ensure our longevity by developing other leaders who will uphold our legacy and embrace the opportunity to lift more people up.
It’s a gift now to reflect back on the arc of my journey. The abiding sense of opportunity and abundance that I felt beneath the surface of my life, even in the darkest and most challenging times, propelled me always forward toward this entrepreneurial dream that I’m living now. My goal, as ever, is to continue to use the gifts of my experience to create abundance for others.
Jeet Kumar is the CEO and Co-founder of In Time Tec and the author of the book, Insights into Creating Abundance
In Praise Of Self-funded, Paced, Intentional Growth
When my husband, Oliver, and I launched our Evergreen® business, Icicle Brewing, we were well aware of the risk involved in a capital-intensive business. Oliver is fifth generation in a farming family in the Yakima Valley in Washington state, and he had been raised through repeated, necessary cycles of bank loans and equipment expenses and the continual underlying stress of unpredictable events that shape life and finances on a farm.
But he also understood the long-term view and growth mindset that is essential for farming and for Evergreen business. He had observed the expansion and evolution of his family’s farm from hops to include apples and cherries, had raised his own cattle in college, and he always had an entrepreneurial vision to build something of his own.
When Oliver and I married after college and moved to the family farm, I was immersed in those same cycles. After several years on the farm, we made the decision to branch out on our own, investing in land and developing a vineyard—another capital-intensive enterprise.
In fact, it was our investment in the vineyard, which we funded ourselves, that left us cash poor and led us to take the first small step toward what would become München Haus and Icicle Brewing. With three young children at the time and the vineyard still in early stages of growth, we needed cash to pay our bills. We decided to open a small kettle-corn stand on one of two investment properties we had purchased in Leavenworth, Washington, a Bavarian-themed resort town in the Cascade mountains. While Oliver continued to work the vineyard, we brought our kids to Leavenworth each weekend, where I popped and sold kettle corn to generate a bit of income.
While the stand, München Haus, became popular, it wasn’t generating enough revenue to justify commuting indefinitely. In the spring of 2002 we made the decision to sell the vineyard and move our family to Leavenworth, using the profit from the sale of the vineyard to fund an expansion of München Haus to include a sausage grill and craft-focused beer garden .
As we put down roots and steadily grew our small business as we generated the profit to do so—literally one piece of equipment and one incremental improvement at a time—our Purpose became clear. We wanted our business to provide benefit for the community, to create a place for people to gather and connect, and to create jobs.
Those goals were the motivation behind each significant stage of our growth. In 2009, we secured a bank loan—a two-year-long endeavor in the wake of the Great Recession—to build a brewery and taproom on our second lot in Leavenworth. We had traveled in Germany with our family and had seen the role of breweries as community hubs in small towns, and we wanted to expand on our existing presence to offer that to our community. We knew that, in addition to investing in the facility and equipment to brew beer, we would need to hire a master brewer to bring that dream to life, which we did. With those early self-funded capital expenses, Icicle Brewing was born.
As visitors and locals came to love our beer and spread the word, increased demand led us to sign on with a distributor, which shrunk our margins but broadened our reach, and ultimately led us to outgrow our original facility. In 2017, we were bursting at the seams in our downtown brewery, and we made the decision to purchase a new property and expand again. We built a production facility and purchased a packaging system, which were our biggest capital investments to date. We funded that expansion through financing that included taking a mortgage out on our family home, which we recognized was a very personal risk but felt was a calculated step, justified by demand.
With an eye on innovation and customer experience, we purchased an experimental brewhouse and remodeled our taproom at the downtown location at the same time. That investment in production, packaging, and innovation proved invaluable through the COVID-19 pandemic. When retail shut down, we were able to shift our focus to packaging, marketing, and distribution efforts, as well as developing new experimental beers.
In 2021, we’re celebrating the ten-year anniversary of Icicle Brewing and the 20-year anniversary of München Haus, which provides an opportunity to reflect on our Paced Growth over time. Each stage of our growth has required that we evaluate and reaffirm our commitment to growing a private business through our own profits. Our journey has been a constant balancing act between funding improvements and capital expenses to keep us growing and relevant while also maintaining profitability, which has allowed us to take care of our people and protect our business. Throughout, we have been steadied by our desire to grow within our means and base that growth on increasing demand.
We’ve taken a series of financial risks to respond to the demand, but we’ve always understood that taking those calculated steps to grow leads to long-term sustainability. Our paced, intentional growth has meant we didn’t need to take on outside investment, and though we’ve been approached by interested buyers, we’ve never seriously considered selling. We love what we do and we want to continue to grow the business with our team.
As we expanded, we have also evolved the organizational structure by building a leadership team and a board of directors and to engage in a more formalized growth strategy and planning process. We know these governance structures and planning processes will further improve our company’s long-term prospects to the benefit of our people and to the communities we serve.
Through that planning process, we made a decision in 2018 to gift a portion of our ownership to key employees to strengthen and incentivize our management team. Oliver and I also transitioned out of daily operational roles to assume advisory positions in the company—Oliver is Chair of the Board and I lead culture and employee professional development efforts. That change allows us to continue to steward the business while empowering our team to innovate and to lead our long-term success. We see endless possibilities for the company and the team, and we look forward to seeing where and how the business will continue to grow.
Pamela Brulotte is Co-founder and owner, with her husband Oliver, of Icicle Brewing Company and München Haus.