Companies looking to preserve their legacy and build a foundation for growth can learn much from PCG’s ability to recognize the need and respond with a significant investment in future leaders.
Jon McCleary:
PERFORMANCE CONTRACTING GROUP, INC.
Performance Contracting Group, Inc. (PCG) is one of the largest specialty contractors in the country, consistently ranking among the Engineering News-Record’s (ENR) top 15. PCG has a unique history, having once been a division of the Fortune 500 manufacturer Owens-Corning Fiberglas. In 1987 a group of senior managers purchased the 40-year-old contracting division of Corning, which would become PCG. Some of the founding members are still leading PCG today. The manufacturing history lives on, as the company is known for the strength of its processes, systems and financial management.
With more than 30 years of rapid growth, PCG has been creating great opportunities and significant personal wealth for its employee-owners. As PCG has grown, however, the company has encountered a key inflection point faced by many contractors: how to preserve the rich culture of the organization and history of performance while passing leadership to a new generation. In this interview, Jon McCleary, who leads strategic development at PCG, shares the story of how the company made leader development a crucial component of its corporate strategy.
Alafat: Give us a little background on yourself, Jon.
McCleary: I come from a construction family. My grandpa was a carpenter, my father, a mason and construction businessman. I started in the field and have worked as a cabinetmaker, carpenter and insulator. During the 18 years that I was involved in our small business, I worked as a foreman and site superintendent running crews at a paper mill in eastern Washington. I didn’t know it at the time, but this was great experience. Eventually, career progression took me into estimating, project management and, ultimately, business ownership from 1989 to 1998. We sold our company and moved our family to northern Idaho, starting a wooden boat company.
Eventually, the contracting business lured me back. In May 2000 I had the good fortune to join PCG’s Spokane, Wash., Insulation and Specialty Services Branch as a senior estimator. The first couple of years were spent building a presence in the western Montana industrial market. I enjoyed the team environment in the branch and was lucky to lead the team as branch manager. In 2005 I had an opportunity to serve on a committee to develop PCG’s Foreman Training Program and ultimately became one of two full-time trainers. The training job took me around the country to 27 branch locations and put me in front of roughly 400 foremen in two and a half years. The travel was tough, on average of more than three weeks per month, but I really enjoyed the work and was very interested in the training and development arena. The next step was to training manager when we expanded our program and hired three more trainers. Today our Operations Training Group serves nearly 1,000 foremen in more than 50 locations around the country. In April 2008 I moved to our corporate headquarters in Lenexa, Kan., and started my current position in strategic development. We currently have a staff of 22 training and support professionals who serve more than 5,000 employees.
Alafat: So you have a lot of history and experience within the organization. Tell us a little about what the business need was that originally drove the current leadership initiative that you have.
McCleary: Over the years, PCG’s strength has been tied directly to our core values. The combination of individual commitment, work ethic, time-tested internal processes and incredible organizational discipline has been the foundation of our success. As we have grown, leaders have emerged in many places. The current focus on developing leaders is an intentional strategy to prepare us for future growth. The old saying of “what got us here won’t get us there” applied to us. The senior leadership team (the Leadership Group, as it is known) recognized that in order for us to expand our business and continue the growth and prosperity that we have experienced, we needed to be intentional about growing leaders in the company and identifying and developing talent. That was a bit of a shift.
In the past we have tried to promote from within when possible by putting top performers into management positions with some coaching from upstream managers in the organization. We have had to rely on the individual’s experience, instincts and street smarts to get him or her through and find success. This approach was a hit-and-miss proposition most of the time. Consequently, we lost some good people along the way. We decided that a structured program was needed to take current managers to the next level and develop a system to prepare future managers. Those are the origins of our current Management Development Initiative.
Alafat: You had invested for years in leadership development. Why in the last few years have you started investing in it more heavily?
McCleary: It goes back to the shift in philosophy. Historically, “leadership” was not talked about specifically; it was blended with the term “management” or part of being a manager. Many thought of it as being the same thing. When we looked at examples of notable successes within the organization, in every case there was a talented leader driving the project or process. We also realized there were some upcoming challenges with succession; several of our senior leaders will retire in the next three to five years, many having been in their jobs for more than 20 years. We needed to make sure that the next generation is ready to lead the company. A structured program is the only way to get this done.
Alafat: What is your role in the leadership initiative that you have?
McCleary: My primary focus today is making sure that the programs we have in place are moving in the right direction. We currently have 48 individuals engaged in a personalized leadership development program. These programs are ongoing and could last up to five years, depending on the individual. I work with individuals and groups to make sure that they are getting the training and development that they need to prepare them for their next job. Through this process, I have developed close personal relationships with almost everyone involved. So there is some natural coaching that takes place along the way. Being able to work closely with my business partners and see them achieve their personal goals is very rewarding. In the early stages of developing the program, we worked with FMI to develop a strategy. We looked inside the organization to determine which leadership attributes predicted outstanding performance and used that information as a foundation. We are constantly searching within the organization to identify talent. My main job is to make sure we do everything possible to develop those individuals.
Alafat: For the benefit of our readers, can you talk about some of the nuts and bolts of this —how you started the process, how you selected the leaders to be a part of the process —what did it look like?
McCleary: Our program is known as the PCG Management Development Initiative, and there are three main areas of focus. The first is to prepare our next generation of senior level leaders for the challenges of those positions. Second, we want to provide our experienced managers opportunities to grow in their careers. The third and largest group is the emerging or future managers. The success of this group will be vital as the economy recovers and our business continues to grow. When we began to consider candidates for these programs, the first step was to create a list of leadership attributes that aligned with our values and culture. Our senior leadership and operations teams measured candidates against the list and selected individuals accordingly.
Today we have a variety of groups involved. The D12 includes 12 senior management candidates who focus on personal leadership development and are engaged in mentoring relationships with our Leadership Group and operations VPs. The D12 have been together since December 2010 and have attended the Leadership Institute and other leadership labs as part of their development track. An important element is accountability; the 12 members are broken down into four-person teams, and every member has an accountability partner. This has been a good way to develop relationships within the group.
This year we added another group called the C12. These are senior corporate staff and department managers who interact with almost every other manager in the company. We think this group is equally important and want them to be able to travel down the same road as the D12 group. The interesting thing about both the D12 and C12 groups is that, from an age perspective, most everyone has 10+ years to go. It just makes sense that this leadership development process is something that we all should do together. In the end, I believe this makes us a better company.
At the branch level, we have the Emerging Managers group. There are 24 individuals engaged in the program, and the list continues to grow as new talent emerges. Personal development and management skills are the objective here. The emerging managers are mentored by the D12 group and have the same type of accountability structure. Finally, we have the experienced managers in our branches. We have been a little slow addressing their needs as the other parts have been a priority, but we want to be able to offer any development needs that come along as part of the overall program.
Alafat: You have the two groups and they have been involved for a year, in some cases closer to two years. What results have you seen so far —what has been your return on investment?
McCleary: There have been a few things that jump out at me. The first is that, up to the point that we formally began our leadership development program, there seemed to be questions and concerns from within the organization about senior-level succession. As an employee-owned company, people are naturally concerned about their future and the leadership of the organization. Because we’ve had such a successful track record, the thought of those key individuals leaving the leadership team is a bit disconcerting to some. If nothing else, the fact that we’ve invested the time, energy and resources into developing a program, and we can see the solution to this, has brought a fair amount of assurance to those who may have been concerned about that in the past.
I have also experienced an increase in confidence at the individual level. As future leaders are able to envision their career tracks, there is a natural confidence that comes with that. As they develop new skills or are introduced to new ideas, they naturally gravitate toward a more positive outlook and feel like they are actually part of the future, and that’s exciting.
Those are some key things. We also have seen some real cultural shifts that have been positive. We’ve had a fair amount of focus on accountability within the organization. We have done a lot of work with “plus/delta” feedback, which is a part of the FMI program. We’ve relied heavily on the Peak Leader model as a guide for our overall development initiative. All those things being part of the bigger plan have created some cultural shifts that have been positive. Our overall communication has been better as an organization due to this focus.
The most significant thing that I’ve noticed is the depth of the relationships that are occurring between members of the D12 group and the Emerging Managers group. All members have an accountability partner. They are responsible for keeping their partners on track with personal development goals, so they have an interest in each other’s success.
Creating a culture of mentoring has been another important part; the D12 members have been assigned a mentor from the senior leadership team. They meet regularly —the expectation is to meet a minimum of once a month by phone or in person. The mentoring relationships extend down through the organization. The D12 is now responsible for specific and formalized mentoring of the Emerging Managers, so each of the D12 has two emerging manager mentees. The process has cascaded its way through the organization. Mentoring is also happening in other places, like our branch administrators, superintendents and foremen. So, the depth of relationships has been the other real benefit.
Alafat: I love that. It sounds like the mentoring, the transferring of information through the different generations is happening. The building of relationships and the attention people are getting would have multiple benefits to you in terms of morale, developing your talent, etc. You mentioned you are employee-owned. Has there been any pushback about how much you are investing in this program? Tell us about that and what the budgeting process looks like.
McCleary: There has been no pushback at all. This initiative has been important and high-profile enough at all levels that most everyone sees the value; I have not experienced any pushback at all from any group. Last week we had our annual budget reviews, and for the third year in a row, we’ve actually increased our budget for developing leaders. Part of that has to do with the Leadership Development Initiative itself, plus the involvement of the Leadership Group in its development. Typically, the way we go about the budgeting process is that we begin with a needs assessment and then back into the various programs that are required to fill those needs. The programs are budgeted on an individual basis; some internal PCG programs with staff costs, while others are outsourced programs. That is how we came to invest in FMI’s programs as part of the solution. All of these parts are rolled into an overall plan and strategy, which I then present to the Leadership Team for approval. This year, I went in with a number in mind to support the plan. During the course of our discussion, we discovered areas that needed to be increased or added. The Leadership Group approved the budget and I walked out of the review with more than I had hoped for.
Alafat: It sounds like the Leadership Team is committed to this process and sees the value in it. I can hear a cynic saying, “It all sounds great, but it takes some time to mentor people and to do all these things, and we’re in a time where there’s so much to do and we’re thin on people.” How have your leaders managed their operational responsibilities while participating in this process?
McCleary: It’s been difficult for some, but I can honestly say that in the first 12 months, we’ve been able to shift the thinking from that of an organization that is managed by competent managers to a culture of teams that are led by very capable leaders. That shift in thinking has done more to get individuals to look at the bigger picture and the future of the company. You asked earlier if there is any pushback from members of the team because of our structure as an employee-owned company. The short answer is no. If anything, individuals feel more responsibility to do what is necessary to be better next year than they are this year. If that means managing their day-to-day responsibilities effectively and still finding time to do those things that will help them become better leaders, they have accepted that challenge. As time goes on and they improve their ability to delegate responsibility within their organization, they are finding they have more time to focus on personal leadership development. A lot of it is a question of the process. Once they get over the initial shock of, “Yeah, this will be more work for me,” and can see how this will help their career and the company, they are able to find a balance between the two.
Alafat: It is similar to how we talk about delegation. To delegate correctly, it will take some time initially. It may take more time than if you were to do it yourself. But in the long run, you get a lot of time back because you’re developing your people and creating a team that can do a lot more. Then you may not have to do some of the things you were doing previously. So that makes sense. I know you’ve sent a lot of people to FMI’s Leadership Institute, and it’s a part of your process, as it is for many organizations in the industry. Tell us how the Institute fits into your overall initiative.
McCleary: I attended FMI’s Leadership Institute in early 2012, along with three others from PCG. My goal was to audit the program and evaluate if it was a fit for our company. Not only did I conclude that it fit our organization perfectly, but also I personally benefited from my experience at the Leadership Institute. That experience was very positive. As we looked at our overall strategy for developing leaders, we decided to map an individual’s development through the end and provide some milestones along the way. We have decided to bookend our Leadership Development track with two FMI programs. When we select a new candidate, he or she immediately is enrolled in FMI’s Emerging Managers Institute. From there, we engage the participant in a series of evaluations. We have a position description that outlines specifically what individuals will need to know in terms of skills and attributes. We measure that against their experience and current level of competency in various areas. Their supervisors will review the evaluations, with assistance from my group, the Strategic Development staff. Then we’re able to come up with a personalized development plan for the individual. Those plans can run anywhere from one year to three years in length, depending upon how much development needs to occur. They are highly customized — tailored to the person and his or her intended position and future role.
At the end of that development plan, once we feel as though someone has worked his or her way through the process, we bookend it on the other side with the Leadership Institute. This is the end of one era and the start of another. It puts a nice cap on the end of the program but also launches the individual into a career of learning and development in the area of leadership. We hope at that point the leader will engage in a self-directed lifetime of leadership development. That’s the way it is set up now, and FMI’s programs have been successful in getting us out of the blocks and also finishing the process at the end.
Alafat: You mentioned you have mentoring going on from the top levels down to the D12, the Emerging Managers and into the organization. Are there other success stories or highlights that you’ve seen in the last couple of years that you could share?
McCleary: I mentioned earlier that there is a high level of transparency and trust that was not evident before the leadership development process started. We are seeing more collaboration between our divisions. There seems to be a lot more interest in one division learning more about what the other does. I would say that there has been an increase in the overall confidence when people think about the future. I constantly have business partners asking me questions about leadership development and particularly, “What can I do to be considered to be a part of the program?” There’s a tremendous amount of momentum, and it has allowed ambitious young leaders clearly to see a path to the future. Shockingly, there has been very little negative. There is occasional disappointment when someone is not selected to be part of the program; we hope that person will ask how he or she can get the skills needed to be considered and then we can work on that. We want to keep the door open to everyone who sees PCG as his or her long-term career track. Those are the main high points.
Alafat: By having a cohesive plan and program that people move through, you are creating a culture of leadership development. There’s a common language, a framework, that’s allowing people to communicate more effectively. Throughout the organization, using the same ideas, words and principles, I would think that would create a lot of synergy also.
McCleary: You’re absolutely right. Recently, we have expanded this in many different ways, but we have actually utilized the Peak Leader Model as a foundation for all of our leadership discussions. For example, last week I worked with a group of our administrative training staff and top administrators from many of our national branch locations. We talked about how to apply leadership at their level and the challenges of leading outward to peers in the business and at times leading upward. It is interesting how the Peak Leader Model applies in many different ways. I mentioned the C12 earlier. As part of our plan, this year we are sending 12 of our senior corporate staff and department managers to the Leadership Institute and then to the associated Leader Labs scheduled in 2013. We are expanding the idea of cascading knowledge down the organization through a formalized mentoring program at all levels. We are all business partners; what’s good for one is good for all, and I believe that this is one of the reasons we have such a great company.
Alafat: It sounds like you are doing a lot to ensure the transition of the leadership principles from generation to generation. I am sure that is creating a lot of confidence among employees that the success you have had is going to be sustainable into the future. What are you doing, if anything, to ensure that the next generation lives the same values and lives the PCG way?
McCleary: We have to continue focusing on our core values and executing the fundamentals. Building a solid leadership strategy on top of that base will ensure that the culture continues. It really comes down to the people and their belief in our mission. We know that we have been successful in many different ways over the years and experienced tremendous growth and prosperity as an organization. Frankly, we have gotten used to that level of success. The only limit to our ability to move into the future is going to be preparing more leaders to handle the increased responsibility that goes along with growth. Some of the growth will come through expanding our current businesses, and some will come through acquisitions. When I think about where we have come in the 12 years that I have been with the company and then imagine another 10 years down the road, I can see many people like me who are thankful that they hitched their wagon to PCG. In 10 years, this company will probably look different than it does today in terms of the businesses we are involved in. One thing that will remain constant is our commitment to our people and their development.
Alafat: That leads me right into my next question. What do you think PCG is going to look like 10 years from now with all of the emphasis you have put on leadership development?
McCleary: We are excited about the future. We’re aligning our leadership development efforts with the impending economic recovery. It will come back one day. We are betting that when things turn around,
we are going to get more than our share of the work. There is pent-up demand out there, and we feel like the preparation that we are making today will position us in the future to be able to capitalize on it. It is hard for me to believe that I have been here for 12 years and have seen amazing growth happen without such a formalized leadership development initiative; so it’s hard to comprehend where we may end up with one. I suspect we’ll be able to weather any storms that come along and capitalize on whatever opportunities are out there. We have a great future ahead of us as employee-owners of PCG.
Alafat: Is there anything else you would like to say to our readers that I haven’t asked you?
McCleary: The one thing that I have left out is why we selected FMI as a partner in this. The logic was simple. When I came to Kansas City and was asked to lead the Training and Development Department, it was a great opportunity for me personally but also a challenging assignment. When we launched the management development initiative, the first thing that came to mind was that we would need a partner who (1) had great perspective on the industry and (2) had been with other companies as they faced the same sort of challenges, to help coach us along and hopefully save us time on the front end by avoiding common mistakes that are made by most. That was the thought process, and there was nobody else in the marketplace whom we had experience with and confidence in other than FMI. Personally, it’s been a great comfort for me to be able to rely on FMI for that support. I have developed friendships with FMI staff and am proud to be associated with such a professional organization.
Alafat: Thanks, Jon, and we look forward to seeing the continued success of PCG going forward. ■
With an estimated 10,000 baby boomers (the generation born between 1946–1964) reaching age 65 every day for the next 19 years, leader development and succession planning become a necessity for enduring success in the construction industry. Companies looking to preserve their legacy and build a foundation for growth can learn much from PCG’s ability to recognize the need and respond with a significant investment in future leaders.
Tom Alafat is senior consultant and principal with FMI Corporation. He may be reached at 303.398.7209 or via email at talafat@fminet.com.