P ower Construction Company operates from a very basic business proposition: that it is invariably more profitable to get more business from your current clients than to spend a lot of time and resources prospecting for new ones. To do that, however, you have to keep your clients happy—very, very happy. “The business model is fundamentally simple: Understand the expectations of the client, and exceed them,” according to VP Gary Schreiber. To do that, however, your employees' work ethic must be centered with laserlike precision on satisfying the client.
At Power Construction, the fit has to be just right—and that applies both to clients and employees. The 82-year-old firm, based in Schaumburg, Ill., is pretty picky about which clients it will work with. In each of the last three years it has walked away from more than $600 million in business, either because its staff was already booked—or the fit with the prospective client organization just wasn't right. The firm steers clear of most public work and focuses on private-sector clients and independent nonprofits, such as major hospital systems and universities. Ninety-eight percent of its work is done on a negotiated basis.
One measure of how well Power Construction has kept clients satisfied is that the firm has never been involved in litigation, arbitration, or mediation for performance matters with any client, architect, or subcontractor. That record goes back to 1926, when Jerome Goldstein, a graduate of Chicago's Armour Institute (now the Illinois Institute of Technology), founded the firm.
“We're not in business to pick fights,” says company president Jeffrey Karp. “Nobody's perfect. It's better to sit around the table and figure out how to fix the problem than to go to court. We fix it, even if it wasn't our fault.” Given the litigious state of the construction industry, it is noteworthy that the Better Business Bureau chose Power Construction from among 1,200 companies to receive its 2007 Torch Award for Marketplace Ethics.
Getting the fit right goes double for Power's employees. The company is obsessive about making sure that every prospective employee understands the importance of finding the “best fit.” This starts at the company's employment website, www.jobsearchbooster.com , where job seekers can make use of various tools and industry research to help them find the right employer based on their individual goals, needs, and aspirations.
The Job Search Booster site is neutral—it doesn't promote Power Construction. In fact, the company encourages candidates to contact other companies, even its direct competitors, and will refer prospects who don't fit in at Power to opportunities elsewhere. “The worst thing you can have is a fish out of water,” says Karp. Two of the 10 owner-partners lead much of the recruitment effort, a practice that elevates the perception of the firm in the minds of prospective employees.
Today, Power Construction employs 210 technical and construction professionals, 40 support staff, and 200 union craft workers. The company, with annual revenues of $550 million, has become a powerhouse (pardon the pun) in the Chicago-area construction market, particularly in healthcare, where it lists such prestigious clients as Northwestern Memorial Hospital, Advocate Health Care, and Rush University Medical Center in its fold. More than 90% of its business comes from repeat customers.
Ten years ago, Power Construction was proceeding merrily along, as it had for more than seven decades, when the firm's leadership received some unsettling new information from its clients. At that time, according to Karp, a routine client satisfaction survey turned up some findings that surprised chairman Al Gorman, then-president Tom Settles, and everyone else in management. “Our customers told us they loved us, but they were concerned about how we would carry on if Al and Tom were no longer directly involved in day-to-day operations,” Karp recently recalled. “They wanted to know how we would pass on our unique culture quickly to a new generation.”
With that question weighing on everyone's mind, Schreiber happened to pick up a copy of Managing by Values, by Ken Blanchard and Michael O'Connor, and took it on a business flight. “I read the book cover to cover on the plane and called Dr. O'Connor the next day,” he told Building Design+Construction.
Power retained O'Connor to help the company reframe its mission and value statements, so that the firm could clearly communicate the essence of its culture to every employee, current or future. Using the principles in Managing by Values, the firm developed a structure that linked each of five values—integrity, excellence, teamwork, innovation, and financial stability—with a “key result” and several “key actions.”
Under “integrity,” for example, the key result is to develop “trusting, long-term relationships” with everyone with whom the company interacts: clients, subcontractors, vendors, architects, and employees. Key actions include treating others with dignity and respect, taking responsibility for one's own actions, and delivering on commitments. “The value words mean different things to different people, but by drilling down, people can understand the behavior that is expected of them,” says Karp.
Over the last decade, that approach to managing by values has guided Power Construction's relationships with its clients—and its employees. “Our people see that there's no ceiling here,” says Schreiber. “There's plenty of opportunity to grow, and because we're relatively small, there's a lot of visibility for individuals. How you perform really matters.” Among current staff, 80% of senior superintendents, 92% of senior project managers, and 100% of project executives and above have been promoted from within the firm.
Almost entirely through organic growth, Power Construction has become a juggernaut in the Chicago metro building market, with enough work in its $1.6 billion backlog to last three years. “Our growth is structured by the capacity of the staff we have,” says Karp. “We don't want to staff up with people who don't understand our culture, just to get more work.”
Looking ahead, Karp says the company will target one or two key prospects a year, but Power Construction's main focus will continue along the path that has made it so successful—achieving growth by gaining repeat business from current customers.
—Robert Cassidy, Editor-in-Chief