Over the last 20 years, Joseph Hagar, CFO of engineering and construction firm McKinstry, has seen exponential growth in the company, with a huge spike in the number of employees and offices spreading nationwide.

But despite being trained as a CPA, he says the company didn’t rely on financial numbers or other metrics to set policies or make business decisions. 

Instead, they created a firm foundation for growth by developing what they considered to be their most valuable asset… as well as putting systems in place to maximize that asset’s potential, company-wide.

We discuss that asset, as well as…

• How to set up predictable outcomes for your business
• What to do to make sure your company doesn’t have a leadership crisis
• Fostering an entrepreneurial spirit in your employees
• The three-layer model for effective employee development
• And more

Listen now…

Mentioned in this episode:

• www.mckinstry.com
• www.linkedin.com/in/josephhagar 

 

Transcript

Doug Hall: I am Doug Hall and I’m your host for the Go For Growth Podcast. And today, I have a special guest Joseph Hagar, the CFO of McKinstry, which is a, an institution and in greater Seattle area. And I’m really excited to have him looking forward to learning about how growth is defined there and growth from his perspective. So, Joseph, welcome to the podcast.

 

Joseph Hagar: Thank you. I appreciate you including me in this opportunity to have a conversation about my history. I always look forward to that. McKinstry has been here for many years.

 

Doug: Yeah, give us that background Good. Good. Tell us where you guys operate? Yeah.

 

McKinstry’s Inception

 

Joseph: Yeah, McKinstry started in 1960. Here in the future center, actually over in Bellevue, and the building is still an old town Bellevue. But as we grew and expanded, we moved over to the Seattle side and Seattle and the Puget Sound region was our focus as a mechanical contractor in the plumbing business. And we decided that there was real opportunity to expand that and help our customers in bigger ways and help design or create the design build the philosophy in the construction industry.

 

And that kind of led us to get into taking ownership of the construction process from engineering through the construction and delivery for our customers, because we really believed in guaranteed outcomes. And that was something that still is very much ingrained in who we are today. So we’ve been around for nearly 60 years. While we took that expertise from what we learned on the mechanical side, and have significantly expanded it beyond just the Puget Sound region. Our construction teams are focused in Seattle, Portland, Spokane areas. 

 

Our energy and sustainability services are nationwide. So we have offices in about 40 different states and with major hubs in Denver, and Madison, and Dallas. And so we’ve been able to really grow East with what we believe is an opportunity in the energy efficiency area is we feel that half the energy used in the built environment is wasted. And we have an opportunity to remove that it will improve the planet, which we all live on. So we’ve been pretty excited about that, that growth in recent years.

 

Doug: Very cool. So given your footprint here in the northwest, and then your 40 offices, how many people work for McKinstry?

 

Joseph: McKinstry has about 2500 folks who workforce we have about 1000, staff members, engineers and project managers and construction managers. Plus, we have about 1500 Union partners that we work with, through 30 plus different union arrangements and plumbers and pipefitters, and sheet metal electricians and data and fire protection, to name a few. And we’re really fortunate to have great relationships with our union members here in the Pacific Northwest to help us build the beautiful buildings that we get to build here. So a lot of people we get to serve, and we’re excited about that.

 

Doug: So help us break that down what I’m thinking, big buildings is what you work on. Right? 

 

Joseph: On our construction site, we do work on larger buildings, Expedia campus, innovate areas is one of the projects we’re working on currently, the Microsoft refresh on their campus, we work closely with them quite a bit, we’ll do a number of the towers downtown with Amazon. So we do large projects, but we have a service team that if you are cold, hot or uncomfortable, come out and help you. And we have a few hundred service vans that can come out and service you at your whim and at your need. So we kind of cross all layers of the construction site.

 

Doug: Awesome. So it’s mechanical systems. So how do you define what systems in a building do you guys touch?

 

Joseph: Now when we think about, and that’s our construction side. And on our mechanical systems, it’s really keeping you comfortable in the built environment, making sure that you feel that you can be productive, and it’s not too hot, too cold, we make sure you keep pressure in the building. So it’s really the heating and cooling aspects of the building. But we do more than that. We also have an electrical part of our organization and may also do data and distributed antenna systems does for wireless infrastructures, fire protection. So on the construction site, we do a number of different trades. So that’s a big part of who we are and what we’re known for.

 

But really, on our professional services side, our engineering side, we do a lot of designing energy efficiency systems. And we work with large institutions like the University of Utah, and, you know, the Denver International Airport. And we do larger clients nationwide that help them remove waste from their energy infrastructure and their buildings. We had a client in the Colorado area, we’re working with a smaller school system where they previously used to heat their buildings using coal. 

 

Through our engineered process, we were able to come in and help them use the ground around them Ground source heating to heat and cool their buildings and remove the waste and the dust, and the carbon footprint came with the coal and move them to a real natural environment to heat and cool their building. So we were much more than just a mechanical system, Doug. And that’s what’s exciting about what we do.

 

Doug: Good. That sounds like touching very much on a growth angle for McKinstry. So we’ll circle back around to that growth element. I’m curious though, Joseph, how did you get involved in McKinstry? What’s your background? I mean, how’d you get going down this road and what explain a little bit about your role there now.

 

Joseph: You bet. My connection with McKinstry coming up on 19/20 years now. Been very fortunate to see a lot of the growth during that time frame and prior to coming to McKinstry born raised in the Puget Sound area and been able to see the ups and downs of our community. I’m an alumni of Seattle University and being part of that community really put a strong emphasis towards, you know, a purposeful driven career. 

 

And so as I ventured on after university, I was fortunate enough to work with Deloitte and Touche and one of the top public accounting firms and working in a variety of industries and banking and insurance and construction in coal mines. And to name a few. But it is kind of interesting, that delight really gave me that broad experience to see a lot of things. And so after working there for a handful of years, I’ve moved on to smaller construction company. And then which led on to a few different industries, because I wanted to get that broader experience, make sure I really developed my skill set to help me be a good leader and be able to help also grow companies and have those experiences that would help me with that moved into high tech and apparel and a few others. 

 

And then there was an opportunity to come and be a part of McKinstry, family and at a time where they were looking to grow quite a bit. And so I was fortunate to join here. And when I joined, we were about 80/90 million in revenue. And today we’re about 700 million and moved into all these different states. And so it’s been quite a fast pace expansion. To say the least, you know, moving from this regional company here in Seattle, and Portland at the time to the footprint we have today has been quite a journey. And sometimes those reins of that horse go a lot faster than you’re prepared to. So it’s been fun.

 

Exponential Growth

 

Doug: Oh, yeah. So you just I didn’t realize was quite that much growth in your 20 years. That’s amazing. So you’ve been involved in 10x-ing the business more or less since you’ve been there? And that’s a huge change. So what’s the biggest takeaway that’s in your mind from 20 years? 10x-ing McKinstry? What? What are the one or two big things that stick out in your mind?

 

Joseph : No, they’re the new look at that kind of growth, there’s a few different things that come into play. First and foremost is making sure you have the right people and looking for and growing and developing folks to help you go achieve that is critically important. And we really, as a culture focused on our people, and then making sure they have the development paths and opportunities here in McKinstry. And the key thing there is really giving them experiences and making sure that they have a diversity of experiences. 

 

And that’s really helped. As we started growing, to be able to take on new things, because we’re used to that, that change. And so finding those those, you know, key talented people and, and then we use, I use kind of a philosophy that Patrick Lencioni and he really highlights about high performing teams, and really focusing on humble, hungry and smart and how that plays into finding that right talent until that play a big role in how we grow. But also as we started to grow, as a small company, so much of it is the culture that drives how things get done and how things are executed. And that needs to change when you go through that growth. Where you need to build a little bit more underlying systems to make sure there’s a framework in place that then you can take that next step. 

 

It’s tough to always can down through culture of how we should do things. When you go from 100 staff members to 1000 staff members, you really have to give them the guidance in the framework to really understand what it means to grow because there is an entrepreneurial spirit that can be fostered, which has a great strength to it when you’re growing. But when everybody’s doing something different, you have less predictable outcomes. And so having siblings and those people play a huge role in a girl.

 

Doug: Did you tie culture to systems and systems to culture? Did you see that happen at McKinstry?

 

Joseph: Yes. Our culture’s really critical to who we are. And as we grew, we wanted to make sure we fostered that culture around who we are, which really puts that focus on our people, our customers in our communities. And as we know, have bigger footprints in Denver, and Dallas and Madison, we wanted to make sure those offices had similar approaches can’t ever be the same or a little different. And so making sure that they could develop their cultures, but stay true to the values and who we are as an organization and really make sure we talk about our values. Now they play a role within how we serve our customers in our communities.

 

Doug: Good. On that point, have you been able to and I don’t want to make it sound cold. But have you been able to systemize building culture now that you’re kind of a big company?

 

Joseph: You know,I don’t know about systemized, but it is something we really make sure to talk about on a regular basis. You know, we really talked about the importance of making decisions around our core values and how that plays a role in who we are. So when we make decisions around benefits, and now we want to support our people, you know, the first question we ask is not how much is it saving us, or how much is it costing us? But you know, how does that impact our people? And that’s a lens of kind of who we are. And from a leadership standpoint, to, you know, the folks that are on the front line, making sure things are getting done, you know, making sure we continue to incorporate that in who we are. And do we incorporate our values into our performance reviews, and how we have our quarterly conversations and all those other pieces. There’s a lot that comes into that because we do want to make sure that people understand who we are. And so in a way to your question, there’s a little bit of a system, creating a system of that throughout the organization.

 

Is the People-First Approach Good for Business?

 

Doug: Yeah, so it sounds like you’re thoughtful from the leadership team on down and you bake culture and talk culture and make decisions based on what’s right for people, because people first is one of your core values I can imagine.

 

Joseph: Very much so. And so are people who are so critical to our success.

 

Doug: Yep. So you mentioned Patrick Lencioni before, I’m a big fan of his work, too. So I, I hear words and threads of you guys kind of adopting some of his methods and tools. Am I correct? 

 

Joseph: That’s very true. You know, the Five Dysfunctions of a team or the advantage programs are a couple of things that we incorporate into our development. I’d mentioned high performing teammates, and the humble, hungry, smart aspects of it, you know, those all play into how we, you know, lead and how we can execute and how we support our folks.

 

It’s sometimes you know, we had our heart or an engineering firm, and when you have known approaches to help your company grow you, you really want to take advantage of those research approaches. And Patrick has such a great history and success. You know, I’ve always enjoyed the work that he’s done. And the proof is in the pudding, which he delivered a lot of great success for companies.

 

Doug: Totally, I’m, I’m a big believer in adopting proven operating systems. And Lencioni’s work is, to me one of the foundational cornerstones that we should all look at. So thank them for emphasizing that. So as you guys sort of, look at the world around you, and you’re now you know, driving towards a billion dollars revenue. What’s the biggest challenge facing McKinstry and again, from the growth context, either external growth in the market or internal growth, to facilitate yourself with what comes to mind there?

 

Joseph: You know, you mentioned that billion-dollar revenue reference point, and that was something or CEO Dean Allen had mentioned probably a decade ago is think about what a billion dollars would do? And how does that change us? And how do we prepare for it and start building that framework and place early to pursue that. And then, early on, I think we didn’t really totally understand really what he was trying to encourage us to do around building systems. And sometimes I think we chased revenues, to try to achieve the goal versus let’s make sure the foundation is in place to go do that successfully. 

 

And so we had a few times where we taste revenues, maybe a little too much, but, you know, slowed down to make sure we have the right systems in place, the right people in place. And you know, that that’s probably the biggest challenge for us today is making sure we are attracting and retaining key talent. And that’s really probably the biggest inhibitor to our growth. And so as we think about that challenge that faces that we are looking towards 2035. And one of those things that we need to do today to make sure to set us up for that. 

 

And how do we develop our people to be able to be constant learners and be evolving as the world around us consistently changes, and then making sure that we bring people into this complex system of McKinstry. You know, we have 50 different business units, as mentioned, 40 different states and 2500 people and a variety of product lines that we work on and having somebody step into this and find success right away, it takes time to get comfortable with it to understand all the different pieces. But some of the things that we’re doing is we have immersion programs where we bring people in and earlier in their careers, you know, many times right out of college and have them come in and work in the operation side and work in the sales side and work in the engineering side and work in the estimating side. 

 

And, and they work in all different parts of our business. So they get that exposure to all the things that are possible before they really find a passion in a particular area. So we really spend a lot of time developing and growing our young, early professional talent to make sure that as we grow, we have these leaders that are emerging through that. And that’s been something that’s been a big part of how we’ve been able to grow is that development of our people.

 

Three-Layer Model

 

Doug: Awesome. So when I talk with CEOs and leaders, I kind of distinguish between external growth and internal growth. And you just brought up talent acquisition, talent development, think back to when you were in organizations, maybe before McKinstry where you had kind of crack through the hundred employee barrier, and then the 250 employees, and then the 500 employees, what internal growth systems or methods made the most difference when you pass those different levels of employee complexity?

 

Joseph: You know, there’s a lot of different answers to that. A few of them in my time here that really stood out, you know, and it was, gosh, probably, I want to say about 10 years ago that we really started looking at, how do we understand our succession, and building our succession framework that we have leaders that will retire or move on or go to Maui, as I like to say, thing, ensure that we are developing the next level of talent and making sure that we’re deeper net? 

 

And so that’s a model that we have seen other businesses use. And so as we started seeing gaps, how do we then recruit and pursue talent, and that we can fill in those gaps or create development plans to upscale or help people pursue their goals. And so that played, I think, a role in making sure we have the right people set up for longer-term legacy success. And that’s played a big approach from changing our mindset. When we get to lead mentioned early on that hundred people to 1000. You know, we added a lot of people, but one area that we really struggled in was management and leadership. 

 

And so we really had to build out our training and development programs specifically around that, because we just didn’t have the strength and depth and that leadership and management part of our business. So we were quick to grow people, or add people but not quick to make sure that they were led with people who had the skills to lead people. And that’s something that we’ve really focused in on. And as part of that, you know, when we look at, there’s a variety of internal management programs we do and help our folks, you know, grow in different ways. But certainly, the individual development is a big part of that. And I’ve always looked at it as kind of a three-layered cake. And, you know, there is that technical aspect around the development where people need to get their, you know, core skills.

 

I’m a CPA, so around gap, or tax or payroll, there’s that core development area that you want to maintain your technical abilities. But there’s a couple other layers, and then that next layer up is around that personal development, and how do we make sure that your personal growth and journey is also factored in? And when you look at helping people in their careers, you know, we’ll sit down and talk about where they want to go? Do they want to be a CFO or CEO or CEO someday, and or they’re at an early level, you know, hey, they want to be a manager or a supervisor, what does that job description look like? What are those underlying experiences they need to have to build to pursue that role, and then creating those opportunities for them.

 

So then they have first-hand experiences in it and making sure they’re mentored and connecting with more senior people until that personal growth is a real important part of it. And then that third layer is really around how we communicate and connect with each other bring compassion and empathy and making sure that we come into situations knowing ourselves and knowing others around us and really leveraging emotional intelligence, and how we work with each other. And it’s been, you know, that holistic approach and developing folks that has played such a critical role in supporting our growth over the years.

 

Doug: Yeah, I really like your three-layer model on individual development underneath the management leadership, so it prompts me to ask you what best practices have served you at McKinstry in your whole executive team. As you focus on management leadership and sort of tactics and systemized it what tips and tools can you recommend, because a lot of our listeners are going to be on the growth curve building their first leadership team or, or going from, you know, management team to leadership team and building a second or third level of management, so what’s helped you guys? I mean, you’re well down the road. But still, there’s some lessons you learned along the way.

 

Joseph: Oh, very much so. And we, there’s a lot of lessons. I think we’ve got a few bruises along the way of not always making the right term. But I think it’s through that, that you learn the most is when you get outside of your comfort zone, and you try things and you push things. And that’s one thing or CEO, Dean Allen and always encouraged us to do is to take chances, and try things new and push ourselves a little bit in areas that we might not do otherwise. And be always learning and seeking new ways of doing things. 

 

And I think that’s played a lot into as we’ve developed this, as you know, we’ve struggled at times, but then as things came together worked really well. So when we look at how we have done that, you know, one other aspect that really has stood out is the importance of how you build teams, and making sure how teams are high performing, because you can’t have a salesperson selling one thing and then handing it off to an estimator who doesn’t trust the salesperson or what they sold. And then the estimators you know, hand it off to the engineer who doesn’t trust how it was estimated to the engineer build something else. And that that framework of trust and high performing teams and how we work together is so critical in the success of the organization. And you know, I have some new leaders that are stepping into leadership roles. And I always find it interesting, you know, certainly as a CFO, the first thing they want to ask is they want to know about all the financial metrics. And what about this KPI? And what about that? 

 

And we really try to encourage them to think about how do they build that team that really trusts each other that’s transparent with each other. That really has a strong belief in each other. And if that team focus will be reflected in the outcomes and the results that they see. And then we can start working on what do we want to achieve goals wise and ambitions wise, and so it’s got to start at that solid foundation of that team that really trusts and believes in each other.

 

The Crucial Importance of Internal Trust for the Bottom Line

 

Doug: Yeah, that’s super important. And I think, to the listeners, you’re hearing a CFO, you know, qualified CPA saying it’s not metrics first, it’s not KPIs first, its people and teamwork and trust first, then number second, is that right?

 

Joseph: That is, that’s how I really tried to emphasize that because the numbers reflect the health of the underlying system. And that system is healthy, then you can start pushing it to do more and beyond what you think is capable. And that’s one thing that’s for the early part of my career, I chased numbers. And you know, you try to alligator wrestle it and try to make the numbers work. But I was getting about the people that were in the system. So you’re right, it’s about the people in the system first.

 

Doug: That’s awesome. Thank you for that learning from your history. So is there another leadership tool or management tool or practice that you guys live by that you can recommend to the listeners?

 

Joseph: You know, one thing that we do is annually, we do an employee engagement survey, and the survey is helpful in its own way. But more what’s helpful in that is, it’s a way that allows our employees to share their thoughts and how they are always seeking us, leaders to communicate more. And that’s been a good reminder, as we really try to make sure we communicate and almost over-communicate, if that’s possible. 

 

And making sure we have a framework in place where we’re sharing information through our leadership forums, to our quarterly conversations through, you know, what Dean used to have was fireside chats where we talked to the company about what’s happening in the organization today, we call it a connections meeting, where we make sure our employees see and hear what’s going on. And, and it’s that constant communication and engaging our people that plays such a critical role in our successes, sometimes in the busy lives that we lead, we get into the work, and we jump into our emails, and we’re trying to get things done and our checklist that we got to work on and grab a quick lunch. 

 

And we’re rushing off to the next thing, but we got to make sure we’re slowing down to really share the journey because it is about how we do this together. Because you know, if you want to go fast, go alone, but if you want to go far go together. And that’s a big part of our culture and who we are.

 

Doug: Right. Those are words to live by for sure. Think about the things we’ve covered in our conversation. And I want you to bring it to a point where you think of sort of like the number one piece of advice that you could give to other folks out there that are building a business or driving a mature business or even thinking about starting a business, what’s the, if you had to advise somebody, you know, who’s got that company and wants to get it to the next level? What’s the number one thing you tell them to focus on?

 

Joseph: You know that number one, for me. It’s about the team, making sure you have people who really believe in what you’re doing, are passionate for, are willing to, you know, be humbled to focus on the success of the team and, and that there’s such a critical outcome to that growth. And sometimes we do have a tendency to just hire people to fill roles, really how that fits in holistically. You know, each of us has our strengths and weaknesses. 

 

And it’s when we look at that, you know, the whole of how each of our skills work together. You know that one plus one equals three methodology that and that’s something that is so important for startups and how we work with each other and how we partner with a two-person firm that grows to three to five to 10 to 15, is that connection of how we making sure all of those skills and abilities are picking up 50 and turning it into the power of 100 is such a critical part when you’re growing a business.

 

Doug: Awesome, great advice. So tell folks how they can learn more about McKinstry.

 

Joseph: McKinstry. You know, there’s a few different things certainly or website, but you know, you’re always welcome to come down. Doug you and I were talking about one thing that we really try to do is be very engaged in our community. And we have innovation centers, at our different locations where we work with community organizations, there’s ways for us to connect through tours, but Mkinstry.com is probably the best and simplest way to learn about who we are and what’s going on in McKinstry.

 

Doug: Great. And if they want to connect with you, they can find you on LinkedIn, right?

 

Joseph: You betcha. I’m on LinkedIn.

 

Doug: Right, perfect. Well look, Joseph, incredible insights today from an approaching a billion-dollar company. We can all of us can learn from that. Thank you very much for sharing that. And both do check out McKinstry and they’re in 40 different places. So there’s somebody near you. So, Joseph, thanks, awesome time today. Appreciate your insights.

 

Joseph: Thanks, Doug. Appreciate the conversation. I really enjoyed the opportunity to share what’s going on here at McKinstry. Thank you.