The reporter telephones Mark Nabity, president of Grayhawk in Kentucky, on a Thursday in mid-February. The goal is to talk about leadership, talent acquisition and the handing off of duties from one generation to the next.
As baby boomers retire, including long-time leaders in the wall and ceiling industry, Grayhawk must be putting new bosses in place, right?
“Your timing,” Nabity says, “is very interesting, actually, because we’re right in the middle of a succession deal.”
In the days leading up to this call, Nabity, age 63, had just completed a long-term succession plan. He signed documents, retroactive to Jan. 1, transferring 49 percent of the ownership in Grayhawk to a 45-year-old employee.
“It’s something we’ve been talking about for a year,” Nabity says. “We’ve effectively done the deal, and he is now my business partner.”
Throughout the industry, deals like this are underway. But it’s not so much about the deal as it is working toward one.
Work at It Urgently
The need for leadership development has never been more urgent. Today’s business environment is “volatile, uncertain, complex and ambiguous,” says the article, “The Future of Leadership Development,” in the Harvard Business Review. Companies “need leadership skills and organizational capabilities different from those that helped them succeed in the past,” HBR says.
But where do you turn for skills and capabilities education?
Traditional executive education “no longer adequately prepares executives for the challenges they face today and those they will face tomorrow,” HBR says. Companies want candidates with the total package—leaders that have “communicative, interpretive, affective and perceptual skills.”
The high-level MBA programs that supposedly produce such coherent, proactive leaders are exclusive and expensive. Even so, executive MBA programs are trying to customize their programs and adapt them to the “idiosyncratic talent-development needs” of their participating companies, HBR says.
To some degree, “the personal learning cloud” of online courses, social and interactive platforms and third-party learning tools are filling the gap, HBR says. But will these educational programs impact construction?
Of all industries, construction needs “executive types” serving at many levels and in many capacities. AWCI member contracting firms need to develop leaders, not just among C-suite executives, but everywhere. Front-line mechanics, lead men, foremen, superintendents and vice presidents all need coaching and mentoring to become confident and to blossom on the job.
“Employees across the board are increasingly expected to make consequential decisions that align with corporate strategy and culture,” HBR says.
So, today’s workers need good communication skills and relational ability. Of course, they need technical knowledge and experience with design planning, construction and, lately, prefabrication’s manufacturing processes. And, oh yes, they would like to spend more time with their families.
This is the age of Gen Xers and millennials, the non–baby boomers who seek approval, collaborative work environments and lots of outside time. This is a tall order, finding people with the necessary skill sets to do construction and willing to work within company flex-time parameters.
Hence, the old way of grooming talent in construction—hiring tradespeople, giving them regular toolbox talks and picking a few from among the crews to attend professional development sessions—no longer seems effective.
And now, new research is turning everything on its head.
Three professors at the Kellogg School of Management at Northwestern University, for example, studied human resources programs at public equity firms—places where the manager tenure is considered crucial to growing fund assets. They reached a surprising conclusion: A high rate of employee turnover is not necessarily bad.
“Companies that have a high level of employee turnover are generally viewed with suspicion,” says the article, “Why Companies Shouldn’t Necessarily Fear Higher Employee Turnover,” in Northwestern’s KelloggInsight online management journal.
But, it turns out, turnover can be good. Companies can replace low-performing employees with high-performers and “inject a fresh set of ideas and skills into the mix,” KelloggInsight says.
This may not sit well with you. Most construction executives, particularly in a tight labor market, see low turnover as gold, and generally it is. However, Northwestern’s researchers found that demand for employment stability can hurt a company’s ability to pioneer change and innovate in the long run. And what’s true of public equity firms is also true of “organizations across all industries,” KelloggInsight says.
Clearly, a new era in wall and ceiling leadership training has dawned. It carries with it a confounding array of new perspectives on how to hire, train, fire, keep, motivate and groom today’s workers and soon-to-be executives.
Deal with Change
To illustrate how construction contracting has changed, consider the staffing required to build wall assemblies today versus the past. Today, it seems, construction companies are top heavy.
“There are more people doing administrative-type work than there were 10 years ago,” says Scott Maki, owner and partner at AROK, Inc. in Arizona. “Ten years ago, you didn’t have much support staff. The estimator would project-manage the job he bid.”
Not today. Maki says that AROK’s framing and drywall contracts require estimators, engineers, production people, project managers and more people in those roles than the past. Clearly, Maki needs more people today, but predominantly “office” people—people with trade skills, people skills, technical skills, design knowledge, an even temperament to lead on the job site, and so on.
How do you find such people?
The topic of many conversations among industry leaders these days is company culture. It’s key, they say, to attracting young talent. A wall and ceiling company’s work environment must be a good fit with millennials, ages 23 to 38 in 2019 and now the largest generation in the U.S. labor force—56 million, or 35 percent of all American workers, Pew Research Center says.
Millennials like to work, but they also like their private time.
“Construction schedules and deadlines are demanding. A lot of work needs to get done, but we understand that people have lives,” Maki says. “We’re accommodating—rotating the crews working out of town, allowing people to have flexibility and time with their families.”
Maki believes that meaningful work and flexible hours appeal to young people.
This insight was presented in the 2013 Foundation of the Wall and Ceiling Industry Research Series report, “Attracting Young People into Construction Field Positions.” It says that the wall and ceiling industry needs to “sell young people on construction.” To do that, emphasize how construction offers good pay. Remind young people in union markets that apprentices can earn a paycheck while they attend school. Tout the nature of our work—building with hands and leaving a tangible mark.
“I tell young people, ‘Give it a try. You can always do something different,’” Maki says. “‘See if you like it’ is what we try to get in front of them.”
How new hires get started with a company dictates their careers, says the Foundation Research Series report. Hire people with the intent that they will be your next generation of foremen, and they will perform up to those standards. Act like you’re hiring future leaders, and you’ll get them.
Maki says he can easily spot leadership talent among his new hires. It’s developing their talent that takes effort.
“People say they want to be leaders, but some lack the ability to handle certain situations,” Maki says. “We offer training, but it starts with identifying the people who have the desire to lead.”
Make It About People
Lee Zaretzky has a theory about attracting the next generation of leaders to his firm, Ronsco, Inc. in New York. The company president says successful recruitment rests on his firm’s reputation as a great place to work.
Ronsco has been in business for more than 60 years. The company tries to build strong relationships with customers and with union carpenters. To beef up the ranks of foremen, the firm is “constantly looking for apprentices to get them in early and bring them into our culture,” Zaretzky says.
“People like working with us and usually stay with us,” he says. “We’re fortunate. We’re able to attract, teach, mentor and develop talent largely based on our reputation of retaining people.”
Company culture is “first and foremost” a recruitment tool at Ronsco. “We provide a nice, warm, welcoming workplace where people want to come to work,” Zaretzky says.
Warm? Welcoming? The company bends over backward to create a work atmosphere of positivity and collaboration. This means Ronsco employees are acknowledged regularly, and they get together often. The company holds events throughout the year—lunches, parties, jobsite meetings. The little intangibles of support, encouragement, engagement combine with the regular skills and safety training to create a positive vibe among young apprentices, which entices others to apply for work.
“Money is not number one with this younger generation,” Zaretzky says. “Number one is feeling appreciated.”
Of course, Ronsco must offer competitive compensation and benefits packages to attract new hires. Here, Ronsco appears to be a standout firm. Besides providing good wages to employees, it has a 401(k) program and a company profit-sharing plan. Ronsco has a medical plan with no co-pays and covers employee medical costs 100 percent, Zaretzky says.
“We’ve had some prosperous years,” he says. “We just put together a cash balance plan, which is a whole other level of non-contributory free money based on the overall success of the company.”
What are the competitive wages in construction these days?
The National Association of Home Builders reviewed the U.S. Bureau of Labor Statistics’ 2018 wage data, the latest data available. NAHB found that construction chief executives earned $166,710 in median annual salary in 2018. The top 25 percent of CEOs grossed more than $200,000 that year.
Training and development managers earned $124,300 in 2018 on average. General and operations managers for construction companies earned $101,380 in 2018.
Drywall tapers earned $55,110, but the top 25 percent of tapers earned $71,680 in median income.
Carpenters, the lowest-paid field workers in the analysis, drew $46,810 in median income with the top 25 percent earning $61,810.
The national median income in 2018 for all industries was $38,640.
The BLS reported that median wages of plasterers, stucco masons, floor layers and tapers increased about 7 percent year over year.
Obviously, wall and ceiling companies need to keep pace with these employee compensation levels. However, as already noted, attracting people to the industry is not always about income opportunity. It’s also about how employees are treated.
In large measure, Ronsco’s personal and caring approach with employees starts with how it treats its small to mid-size general contractor customers.
“These contractors are very relationship based,” Zaretzky says. “We like to work closely with them and be brought into projects early so we can help them design and develop and come up with solutions.”
Such a service commitment requires employing top talent and developing that talent for the future.
“It’s very much on our minds,” Zaretzky says. “A lot of our field personnel are starting to retire and have retirement plans.”
What are Ronsco’s next generation leadership plans?
The company has a 10-year plan to develop its foremen. Company principals, Zaretzky and his older brother, Ron, are grooming the son of Ronsco’s outside superintendent “to take over his father’s big shoes,” Zaretzky says.
“We’re using our time to move away from working in the business to working on the business, teaching and developing and training our next generation,” Zaretzky says.
Feel Good About the Age Difference
Grayhawk has experienced a wave of retirements and announcements of upcoming retirements. However, “guys in their 30s and 40s are stepping up big-time,” Nabity says.
He says they have talent and a measure of seniority with Grayhawk. He believes they’re prepared to take on tomorrow’s leadership tasks because they embrace and know how to use technology.
“These guys have an iPad and have access to everything—drawings, RFIs, change orders, productivity information,” Nabity says. “They turn in payroll using technology.”
Yes, but do they have leadership talent?
“That’s what I look for,” Nabity says. “We can put them in leadership programs provided by AGC, ABC and AWCI. We look for the right type of person, who exhibits leadership skills, and plug them in.”
Grayhawk currently has 110 employees and, on any given day, 50 to 60 subcontracted workers. About “a half dozen guys,” Nabity says, “are involved in [leadership training] programs right now.”
What about at the top, in the “corner office” of Grayhawk? As noted at the outset, Nabity has it figured out. For the next five years, his job is to train, nurture and ensure that Grayhawk’s new owner-executive thoroughly succeeds.
“We feel good about our age difference,” Nabity says. “He’s at a perfect point in his career to take this on.”
Grayhawk’s new principal, whom Nabity didn’t name, comes out of the firm’s drywall operations. Nabity says he has rebuilt that side of the business and has it staffed by people his age, 45 or younger. It’s a strong team with a strong market position.
“We just came off the best year in our 53 years as a company,” Nabity says. “We knocked it out of the park.”
Since the new principal comes from the drywall side of the business, will he also succeed in leading the company’s prefabrication operations?
Nabity, a prefabrication expert, is focused on making it work. He plans to bolster those around him and pass off his 40 years of prefabrication knowledge.
“It’s an exciting stage of my life,” Nabity says. “Let me think. It was 23 years ago since I got ownership. That’s a generation.”
And now it’s time to do it again. Only this time, it’s Nabity’s turn to provide financial wherewithal to float the transition.
“I fully anticipate that even after he completes his buy-in I will have to be his financial lifeline for two to three more years,” Nabity says. “Because this business gobbles up capital.”
Mark L. Johnson writes for the wall and ceiling industry. He can be reached via linkedin.com/in/markjohnsoncommunications.
