(This essay is taken with the author's permission from a recent blog post on The Misura Group website. It has been edited slightly.)
By Tony Misura, Founder, The Misura Group
People, teams, and companies grow and change. Sometimes all parties are growing in sync, mutually enhancing and rewarding the broader relationship. But more often, people, teams, and companies grow in different directions, and the foundation of the alignment of personal and professional goals supporting the company’s goals has crumbled, leaving all parties on unstable ground.
The LBM industry is experiencing consolidation merger and acquisition events at a breakneck speed. The merger of BFS and BMC is going through the typical stages of an integration of two large, well-established, distinctly different cultures and business models. BFS is also requiring that its leaders integrate Alliance Lumber, a $400 million Arizona business, and Paradigm, a design estimating technology business. US LBM is keeping pace, buying J.P. Hart (estimated annual revenue: $400 million), American Construction Source ($800 million), and Brand Vaughan ($150 million), adding to its long list of acquisitions.
As with most large corporate mergers, those involved have a front-row seat to watching some leaders get promoted on merit, others clearly on something other than merit. Even when promotions aren't involved, mergers can hurt a company if it has a “no one is left behind” approach. Underperforming leaders hurt the people who report to them.
Life is challenging enough for dealer leaders at privately held companies. It's even tougher for publicly traded companies, as the construction industry's fragmentation, volatility, chaos, variation, and complexity create uncontrollable levels of risk for Wall Street. BFS has faced this challenge since 2005, and US LBM, with Bain Capital as principal owner, will likely follow the stock-exchange listing path. Bain will want a return on its investment, and the best place to realize that goal is an Initial Public Offering.
So, operating under those conditions, where do BFS and US LBM go to find the leaders they need? There simply are not enough people who can successfully meet Wall Street expectations while also understanding LBM's leadership dynamics. If they hope to succeed, BFS and US LBM will have to develop their own leaders. At the same time, they must be willing to remove under-performers--the erratic, unpredictable types who are poor mentors--regardless of political consequences.
One potential role model is 84 Lumber. Roughly 800 fresh 22-year-old managers-in-training are brought into the company every year. 84 efficiently releases those recruits who do not measure up, and what remains are hungry, humble, and hardworking people. If you are 50 years old at 84 Lumber, you no doubt have kept your edge and youthful hunger, as falling short of company expectations would earn you your last 84 Lumber paycheck. Everyone must respect the transparency, consistency, and focus on performance at this privately held company, along with its $4 billion in sales.
That's not to say you can't succeed if you are publicly traded. There now are about 20 such publicly traded home builders in the U.S., and they are gaining share. In the Minneapolis market, the top 15 builders (the majority of which are public) control 80% of the new housing starts. They haven't just survived the Wall Street pressure cooker, they're outpacing the privates.
I believe that dealers that want to succeed amid these market changes need to know the ownership structure of general contractors in the market to better anticipate that market's changes. The big public home builders want an LBM dealer that will evolve its business model to embrace the rigor of continuous improvement and partner with the builder to crush inefficiencies out of the supply chain.
Mid-level executives at dealers can increasingly expect to find owners that expect them to handle the intensity of meeting customers’ and ownership’s expectations. If the ownership structure is publicly traded, the job takes on additional complexity, like moving to 3-dimensional chess.
How well can you, as a mid-level exec, answer these challenges? Expect speed will be a major factor. How fast can you grow as a professional, and is that rate of change on pace with your company? How quickly can you adapt? How fast can you take on more responsibility and drive greater results?
Professionals with the right answers to these questions will have a bright career path with the right company. If your current company or its leadership is not evolving at the pace needed to create the right opportunities for you, or the dealer's customers are losing market share, then this is a clear signal to start a career search process.
If you are reporting to an underperforming leader, embrace the inevitable. It's time to start a career search to find a better mentor. Evaluate companies’ values on their actions, not their words. Ask these questions:
- Who is being promoted, hired, and fired?
- What defines success?
- How is success measured and rewarded?
- How do companies invest in people?
- Which leaders are known for developing and promoting people?
Understand, as well, the pace and speed of the company. What is the level of accountability and responsibility, and does the role have ample authority to deliver on expectations?
If you are 25 years old and working for BFS and US LBM, you are likely to find solid alignment with your personal and professional goals. You are with a fast-growing, stable company with a relatively well-defined career ladder. If you are in that high adaptability career arc common with 25- to 35-year-olds, soaking up all the training and development US LBM and BFS offer, the business model is likely to be structured around you.
Large, fast-growing companies with 300-plus locations have to build a business model that gives their lowest common denominator--the 25- to 35-year-old green leaders--what amounts to a boot camp. Greater centralization and top-down directives are to be expected. For some youths, a good boot camp is great training. For others, a bad boot camp is like being in the movie Groundhog Day--doing the same thing over and over, with seemingly no exit.
If you are 40 to 60 years old, you graduated from boot camp a long time ago and have earned the authority to make market- and account-based decisions quickly. But if you work for a big company, you may find your authority eroded with corporate bureaucracy and death by meetings. In such a case, you might have to act like a 25-year-old: Make sure you can bounce a quarter off your bedsheets, polish your boots, and don't make a move until the marching orders arrive. Alternatively, you might embrace the fact your professional value and life happiness are likely to be much greater outside of these corporate business models.
You and your family’s socioeconomic life experience is predicated on how you are valued by the people and company you work for. People commit 33% of their life to this endeavor. Maximize the positive energy and financial rewards from the experience.
