Transcript

Michael (00:00.088)

Welcome everybody to the Family Biz Show. I am your host Michael Palumbos with Family Wealth and Legacy in Rochester, New York. Today I've got a fun show and this is, we're gonna be talking about construction, the construction industry and succession planning in the construction industry for family businesses with Jerry Aliberti from Pro-Accel. look, it doesn't matter whether you're in the construction industry or any other business. If you're a family business, we're talking succession today, you're gonna get lots of things. There's just a couple of nuances for those of you who are in the construction industry, they're gonna make a difference. So Jerry, welcome to the Family Biz Show

 

Jerry (00:36)

Mike, thanks for having me on board, man. We've been talking for a while, so I'm excited about this show.

 

Michael 00:40)

Yeah, me too. You know, it's really neat. know, Jerry and I don't know each other through anything but the internet. One of my clients introduced us about a year ago and we started chatting and talking. We're like, and then I'm looking at the work that he does and the work that I do. like, we got to be talking a little bit more often because together we could do some things that might be fun. So I'm really excited for today's episode. I think there's going to be a lot of nuggets that you're going to be able to take out of this today, everybody. So.

 

Hold onto your seats and I will kind of go from there. Jerry, if you could just give me, give the audience a little bit of your background in terms of where did you come from? You know, now you're in this consulting coaching business teaching a professional work in the construction industry is your focus and your niche, which I love that you have a niche in what you do. And again, you and I have talked about it. You could take all the things that you've learned and use them in manufacturing, use them in retail or whatnot.

 

Michael (01:38.562)

But you know this construction industry like the back of your hand. let's, how did that come about?

 

Jerry (01:43)

Yeah, Mike. So, mean, I always knew I was going to get into construction even from when I was a little kid. I was one of those little 10 year old kids and my father's, you know, in my backyard taking my dad's scrap wood and building things, you know. So I always knew construction was my path and I grew up right down the block from a trades and technical high school. So I went to high school and I took architecture as a major, right. And then I

 

I tried engineering in college and engineering wasn't for me, civil engineering for three semesters. And I transferred back and I got a degree in architecture with a minor in construction management. I went on to go work for a company who had all engineers, right? So then I went back to Kevin engineering and you know, I've been in construction for over 22 years in New York city and the surrounding areas. I started off working in highways and bridges. And then I went on to work for commercial who's still heavy civil, but they also did a lot of commercial work as well. So I always  work for self-performed GC's, meaning I've managed my own crews and I managed my subs. And I moved up really quickly in my career. I'm a competent construction professional. have boots on the ground experience. I ran over 300 million plus of my own work in addition to being a part of several hundred million more. And I've also been fortunate to experience estimating, which has taken on a completely different shape in the construction business the past decade.

I was a senior estimator managing over $12 billion worth of work on the estimating side. So I got my entrepreneurial itch and I didn't want to take the traditional path of starting a construction company. I didn't want to get back into New York City and deal, I'll be honest, I didn't want to deal with unions and all. I went the consulting route. I was always a part of strategic development. I was always a part of, hey, you know what, let's implement something new and let's...

 

Jerry (03:34.902)

Have Jerry take it, know, take the bull by the horns. Going to consulting and the coaching route was always, it was just a natural path for me. So now my consulting is also kind of shifting into coaching as well, which I really love because, you know, to be a great leader, you need to have really hard conversations. And I'm that type of person who helps people push them to have those hard conversations, which is so critical too.

 

a successful business. Hence the reason why I think you and I really are able to get along so well because that's important in succession planning, right?

 

Michael (04:08)

100 % and you sent over an article it's called family first business strong mastering the challenges of succession planning and construction and again you know I read the article and the first thing that I'm like you can take off construction you know just about anything in here and it fits but I really love that you have the niche and I think that's one of the things that a lot of people a lot of families need to understand is that you know yes somebody may have a niche in what they're doing

 

But it transcends all of those different things. Don't get lost in the fact that this was built for construction. There will be some nuances there, but the basics and the foundation is still pretty much the same. absolutely. So let's talk about, you know, this article that you wrote, and I appreciate that you shared it with me. What are some of the things when you're talking about, you know, succession planning with the clients that you've spoken with that are family owned, you know, what are the, what are some of the nuances and some of the things that you're talking about?

 

that you think are some the most important pieces for them to be considering right away.

 

Jerry (05:09.75)

I think the most important part is to find common ground, right? And then diving deeper to what that common ground looks like, right? So there's multiple generations that you're dealing with and each generation has their own mindset and views of what they want out of the business, right? That older school mindset, you know, for them it was all about the grind, the 60 hour weeks and 80 hour weeks, you know. The younger generation wants more of a self-run business where they're like, you know what? Our business has been around for 50 years. Why am I still taking care of submittals in the day-to-day grind? I get the first couple of years you want the younger generation to understand how the business works. I get that part of it, right? But it's a matter of finding common ground and it's also letting go that the younger generation will bring the company to a different level. Sometimes it's not always the next level up.

 

Maybe sometimes it's a little bit back like, know what? Maybe I don't want to grow this to 150 million. I'm good at at 80 hundred. Now you need to grow the company because your people want to see that they're working for a company that's growing as well. They want bigger salaries. They want more promotional outlets as well. So I think the biggest thing is finding common ground, which I feel so many don't have. And that's what's the core of the friction that they may have.

 

Michael (06:38)

Yeah. I have noticed what you said a hundred percent to be true all the time. think there's another aspect of that common ground. think there's several other things that we could talk about just right inside of there, but one of them being, you know, the older generation and maybe, you know, wanting to take their foot off the gas so much. They may be more in a, want to, I want to be safe. I want to make sure that I can retire on, make sure this thing doesn't blow up. You know, the, don't want to be worried about.

 

the next job and the next piece and you know that I'm on the hook for a lot of this stuff where the rising generation might be saying, look at let's put our foot on the gas. We want to grow this thing. There's five of us that are here or seven of us or two of us that are here and there was just one of you. And so we want to do something different.

 

Jerry (07:25.938)

I think the majority of the the rising and as you call it which was perfect words the rising generation they want to take the company to the next level so the the retiring generation right is kind of sitting at let's just say 50 million they've been sitting there for a long time and the majority of the reason why is because they have our time trusting

 

the younger folks that they're bringing on and they're having a hard time delegating because their mindset is so stuck in, the business and I need to take care of everything. I can't take a three week vacation because my business is going to fall apart type of mindset. So the rising generation wants to take the company to the next level and they know that.

 

If we got the company the 50 million and they've been stuck there for 15 years is not going to take them to a hundred million So that's why they're more open to people such as ourselves who are working with so many different companies and can pretty much help them answer questions at a fraction of the time as well

 

Michael (08:27)

Yeah, a lot of times people are like, I'm not, I'm not sure I want to spend the money for a coach or a consultant. And I tell them all the time it's an investment. And if you don't get a return on your investment, then you've got the wrong consultant or coach. This should be safe in you money, you know, as an, because you're investing in these things. Cause like you just said, it's the speed to the solution that gets you there. Let's talk about one of the other things that I think, you know, that has struck a chord for me is thinking about.

 

Michael (08:55.65)

the differences between generations. like if I'm the founder and I'm sending it over to the next generation, the rising generation is, you know, G2, generation two, there's a difference in that transition than there is between G2 and G3. And then definitely by G3 to G4, it should totally be different. And what I mean by that is just like you said, at G1 and sometimes at G2, I'm still doing everything.

 

I'm still, I haven't professionalized the business. I don't have a leadership team that takes care of it. I have lots of good people around me that get work done, but I may not have a lot of good people around me that are making decisions about the future of the business. Does that ring true for you?

 

Jerry (09:40)|

Yeah, so, so like the first generation, they were the doers in within the business for the majority of their time. 100 % right. They were the doers. So they had boots on the ground experience. They knew how the project managed, how to be a super, how to be an estimator. They know everything about every position. That next generation now worked for

 

for that first generation, they only work, they only know what they know within that organization, right? So as you start going from the next generation to the next generation, they're further in tuned with the boots on the ground experience. And I find that their conversations are not as aligned, right? So they're not as in touch with their employees as that first generation, right?

 

And also that respect level changes as well. That's why on a previous call that we had, I mentioned that it's gotta be, succession planning is done over the course of five to 10 years and it's done in phases, a phase of delegating tasks and a phase of authority shifting as well, right? So, and then like once you start getting to the third generation, that's where they're so out of tune with...

 

Jerry (10:54.19)

how it is to be a salaried worker and know that you may lose your job at any given day. And that's where someone like me who's been in that position is really able to tell that second and third generation, hey, you to put yourself in that person's shoes, right? Don't think that they're not showing up because they don't love their job and they don't wanna work. They have a family to feed. They're working paycheck by paycheck, right?

 

They know that any given day they can get fired. So that's how I help a lot of the multi-generational owners kind of change their mindset. Am I hitting on the points?

 

Michael (11:36)

Yeah, no, think that's definitely one facet of it is sometimes people can get out of touch and you've seen that obviously, no? And so I think that's...

 

You know, there's Michael's 11th commandment. don't know where I heard this from, so I'm stealing it. But the 11th commandment should be thou shall not fool thyself. And I think in your circumstances, a lot of times the current generation is like, of course I understand everything that's going on out there, but realistically they need somebody like you saying, you're missing what's happening for the worker that's out there for the journeyman, the labor person that's out there doing their job day to day. You are kind of missing.

 

I think the flip of that I would say is that there are many that get it. They do understand. They went through, they worked through the ranks to get there. But on top of the fact that even though they do get it, there's the impact or how do I say, I'm trying to think of what exactly what I was thinking before was the fact that come on, Michael, this is what editing is for. Just Christina, take care of all this for us. pausing for a second because I had it. Fudge.

 

Michael (12:45.068)

Got it. I got it. so what the other thing that happens for the rising generation is they are thinking about professionalizing the business and they don't have to, they don't have to make every decision. And they are really starting to give trust out to that leadership team. And if they don't, if they don't start building a leadership team, if they don't start to put that together and they're still kind of holding on to all of the positions and all of the things.

 

It just gets harder and harder to do that. To get to 50 million, to get to $100 million, you better be surrounding yourself by people that are willing to step up, you trust, they can make decisions without you. If you're making all the decisions, you're become the bottle.

 

Jerry (13:23)

And Mike, you know what, so we're recording this in mid 2025 and there's a tremendous, especially now with AI, there's a tremendous amount of resources at your fingertips, right? The older generations, they figured out everything on their own, right? So that up and rising generation, they know that there's resources out there and they're,

 

Now they're hearing about EOS and Metronomics, we speak about, right? And all these different platforms and all these different coaches and different industries that are coming out that are helping organizations grow so they understand that you need this specific type of structure. I personally want to give the older generations the benefit of the doubt that they just didn't know that

 

what a structure looked like because they didn't have that time to read books because they were working 80 hours a week, right? They were tired. you know, there's also that different dynamic as well on that different perspective.

 

Michael (14:23.546)

I think that's a really good one. A lot of times the, you know, the person in the older generation, the controlling generation, they might not have gone to college. They just knew how to do all of this stuff. And there was nothing wrong with that where then they send their kid to college and they're coming back with, you know, let me show you how this AI estimating software works. And, you know, I can estimate, you know,

 

a million dollar project, a $20 million project in four hours versus the 40 it used to take. And I'm just making those numbers up, obviously, but yeah, it's the technology and the modern resources have changed dramatically.

 

Jerry (14:59)

Absolutely. you know, and to the core of any of my initial conversations with let's say a second generation business owner is, hey, you know, my pops was working 80 hours a week. He didn't come to any of my ball games. just wasn't a part of the family. Not because he's a bad person, because he was just a really, really, really hardworking man or woman if your mother was the original owner. And you know what?

 

I don't want to be a doer of the business. I want to be a builder of a business now. I want to be a part of my family organization, family events, and I want to go watch my kids ball games. So it's a change of mindset and it's powerful. It's powerful. And the initial generation is scared that they're going to give the business to people who don't care so much. Hence the reason why EESOP saying profit sharing is becoming such a big thing in all businesses as well.

 

Michael (15:54)

Huge. Let's talk, when we're talking about succession, let's talk about what are some of the emotional factors that are happening that you've seen through your time in helping families through this process.

Jerry (16:07.478)

It's just straight up trust, right? It's just trusting that, you know what? Wow, I did spend 30 years of my life, literally my entire life building this business, going through the emotional roller coaster that comes with building any kind of business. And now, you know, I'm going to give it to even my own child, right? You you even have doubts in your own child, you know? So there's that emotional side of things. And then there's the whole building a business around technology.

 

Right? Technology is something that's, I mean, I'm not even tech sad, right? You know, and it's just, you know, now you're relying decisions on that are being involved around technology. So really it's just the emotional rollercoaster and the emotions that comes with the entire process as well.

 

Michael (16:56)

Yeah. And then the other piece I think is for the generation that is handing over the reins. It's the, I'm not the CEO of this business, if I'm not the person owning this business, I've been doing, this is who I've been for 30 or 40 years. Who am I if I'm not that.

 

Jerry (17:13)

Right, it's that self-reflection as well. So it becomes a part of your identity. Being in the grind every day, day to day. If you're a CEO and you have, let's say, a hundred million dollar company, you should not be involved with why a certain delivery wasn't delivered to one of your projects. That should be far, far away from any kind of thing that you're even worrying about throughout the day. If you're running a hundred million dollar business,

 

You need to be a part of bringing in backlog and your strategic development and knowing what your long-term initiative is. Everything else beyond that, it's going through your chain of command. And that's another thing too, is people don't take an org chart serious. You need to understand what the chain of command is and within the organization. I'm not saying that you can't have an open door policy. I love open door policies. But if you're forming, you know, I'm talking construction. I could do this for any kind of company, but...

 

Jerry (18:11.136)

stick into construction if your foreman is bypassing the super bypassing the project manager, bypassing the senior PM bypassing the project executive and going right to the owner and you're allowing that you're building a culture where one you can't get out of the business and two you're disrespecting all the different leaders that you put into place right and you're under powering them and you're you're and you're cutting their feet from from below them

 

And these are so critical in any of my coaching calls, right? So it's insanely critical. And just the CEO just doesn't understand it because they just don't grasp that big picture. And that's fine. long as you admit to it, as long as you admit to it and you're willing to change. That's another big thing, You just don't know, you don't know.

 

worth.

 

Michael (18:56.194)

Thou shalt not fool thyself.

 

So this, think this goes back to why, you know, succession planning isn't a destination. It's a process and it's a multi-year process because there are, to your point, I think there's a lot of aha moments that need to happen for most people to say, so you're telling me I shouldn't be in the delivery meeting. You're telling me I shouldn't be in the trucking meeting as we're doing that stuff.

 

And if I'm in every single meeting, every single week, how can you ever retire somebody you got, you have to, you have to turn over the reins and say, run this meeting for a week without me. And let's see what happens. Now let's run this meeting for six weeks without me. Let's see what happens. And you've got to look for what breaks so that you can go and do what, you know, when you're, when you're thinking about this multi year, you know, process, what are some of the pieces and what are the things that you're putting together and helping a client to kind of think through?

 

all the different things that they may or may not have been thinking about in this succession plan. 

 

Jerry (19:59)

So, Mike, I first want to bring up one really important thing. You mentioned the word process, which is so important. The process never ends. When you successfully go from generation to two, generation one to two, and then so on. Who's taking over your role as well, right? So who are the leaders and with it, if you want to get to the next level, you're going to be introducing new leadership roles, maybe for the first time, you're going to be introducing a CEO. So that process never ends.

 

Jerry (20:29.014)

It never ends because before you know it, you're probably having your own kids who are going to be coming on board. Or maybe he's just looking to sell off the company one day, right? Right. The process never ends.

 

Michael (20:38)

And to your point, it doesn't ever end on anything. You and I, our company just introduced the family business flywheel and it's all about this growth and exit planning and growth and exit planning always happening. The wealth management always changes and the family dynamics always change. And somewhere in there is always going to be changing and you know, somebody gets married. Now all of a sudden the family dynamics just shifted.

 

you know, and change. just, you you lost one of your project senior project managers and you've got somebody new coming into the leadership team. What does that look like? And so you're always changing. love that.

 

Jerry (21:14)

Right. And just to dig a little bit deeper to what you had originally asked me before when I mentioned about the process, you know, I just wrote a free book. It's called Built to Win. It's essentially about how leadership, how leadership, team alignment and accountability is critical for your construction business success, right? So we're talking about top level, we're talking about top level succession planning, diving a little bit deeper on how any of it could be.

 

Possible is increasing accountability within your organization, right? So each of your people each of your employees need to be very crystal clear on what they're supposed to be doing day out and day out day in and day out to drive your company forward for it to be successful and it starts with accountability and building that culture as well so you can properly secession plan your business and step out of your business because I feel that

 

Jerry (22:12.174)

A large part of the reason why a lot of succession planning may not work is because you're not building the structure within the organization so you can have the confidence to delegate and get out of your business and go from generation to the generation. So going back to the first generation, they never built that structure and that's why they don't have the confidence to pass the torch on to the next generation. They just don't know what structure looks like. They didn't have the resources that are

 

available to us today, right? Does that make sense?

 

Michael (22:44)

they didn't have the time to think about their doings. They're out there building the business. I didn't, if I didn't, wasn't, you know, what'd you say boots on the boots in the field. If I wasn't out there doing the work, I had to worry about it. So how could I find time to work on the business and work on, you know, the skills transfers of this person or the milestones that are supposed to happen, you know, because I got a project to run.

 

Jerry (23:06)

Sure, absolutely. Absolutely. And again, it's a mindset shift, right? So I think Succession Planning has a little bit of therapy put into there as well, I'm part therapist in a way.

 

Michael (23:15)

%. What else is important? Like talk about skills transfer and milestones and dates. When you're working with somebody that's, you know, working on that transition, you know, what are some of the skills that you've seen regularly that keep coming up? The next generation, the rising generation doesn't have these yet only because they haven't had at bats. So we need to give them some at bats to learn those skills.

Right?

 

Jerry (23:41.27)

Right. Well, I mean, for one, it's about leadership as well and understanding what a real leader is. You know, I mean, I've seen some companies where that second generation, they have so much pressure on their back because they want to keep the family legacy going where they feel like they need to run with an iron fist and

 

screaming at everybody and yell again, you know, I do come from the construction background, right? So, and that's so wrong and it's really understated, it's given support, but it's also stopping people on their tracks when you ask them a question and they don't have an answer to a question that they should have an answer to, right? So it's building that culture as well. And it's also understanding the phases that's required.

 

to properly secession plan. I mentioned earlier on this podcast that, first it's understanding what the core responsibilities were and how to delegate that to the next generation and maybe breaking that up into phases if you're a larger company, then breaking it up into phases of authority, right? Because your older school employees that have been with you for 30 years, they're gonna go to POPs all the time for a lot of the big questions. Now they need to start going to...

 

to that next generation, you know? It's understanding the phase of it and how you're, it all starts with discovery, right? Let's understand your business. Let's understand where it's at right now. Let's really dive into the mindset of that first generation and then really understand what are there, what's really gonna keep them from building the confidence to pass the torch.

 

and really trying to ask good questions to get to the bottom. And a lot of them, it's really tough for them to open up, you know?

 

Michael (25:30.366)

I think you just hit on something. want to say it just a little bit differently. A succession plan that worked for ABC construction is probably going to look an awful lot different from the XYZ Corporation's plan because of just what you said. They run a little differently inside.

 

Jerry (25:48)

Well, that's why I'm saying that you kind of need to start with a discovery plan, right? So so there is no blueprint like I love it when you go on the internet you say I got a blueprint to build your construction business Really? You got a blueprint to build any kind of any kind of construction business every every niche every geographical area every city and within that geographical area has its own kind of a System to go about it's the same thing. We're building any kind of business

 

Michael (26:15)

Yeah, it's not all union halls are the same across

 

Jerry (26:20)

Exactly. Some are for villain wage, some are union halls, and some are just $18 an hour type of businesses.

 

Michael (26:29)

Okay. Talk about Switch. One of the things that I like to say to people is that succession planning done properly looks an awful lot the same as growth planning, right? It's two sides of the same coin. I'm either growing the business or I'm getting ready to exit the business or transfer the business or do that succession planning. Inside of there, the keys to growing a business, they run the same as, you know, in order to be able to exit the business. I need to have that team of

 

Michael (26:58.754)

that has real good accountability, right? What are some of the other things when you're growing a business and we'll take them and go back and forth between succession planning and growing the business, but what are some of the other things that you've seen through the years that where there's bottlenecks or the owner is currently stuck in their growth plan and they just need to change some of their mindset? And you mentioned accountability as being one of those things. What else are some of the other areas where

 

They might be bottlenecking in what they're doing.

 

Jerry (27:28)

I think to the core of it is just structure, right? So what the structure of working with an organization is really understanding what each of your employees need to do every day, right? So if you have three employees that are responsible for the same outcome on one particular project, then you're going to have a lot of failure point that goes like this.

 

Right? So really there's the accountability aspect of it and what do you have in place where accountability is being checked off every day, right? If people don't know if they're successful, how do you expect for them to grow? Right? So, you know, if you're hiring someone from your competition to do a specific role, you can't expect that, yeah, they're coming from my competition. They know exactly how to do this particular role because they're coming from my competition.

 

Back to your point before, what worked for them isn't going to work for you, right? So that's why you need those processes in place and really getting clear on roles and responsibilities, really getting clear on what a chain of command looks like. I was looking at a contractor's org chart not too long ago and there was no...

 

Jerry (28:41.41)

This person responds, supervises this person and so on. was kind of just everything was lumped up and they were like, this is my org chart. That's not an org chart. That's just a piece of paper that has all of your particular titles lumped up into one thing. And it's like, there's different levels of each of those titles as well, right? So it's really building the structure within your organization. What kind of tech stack do you need as well, right? What does your financial system look like as well?

 

And how are you monitoring cash flow? So I mean, you cash flow to run any kind of business. You can operate a business without profit, but you need cash flow. Of course you want profit. That's really important as a business owner. All right. But you need to understand how cash flow works in working organization as well.

 

Michael (29:27)

Yeah. And which that becomes one of those transferable skills. They need to understand the difference between, you know, everybody wants revenue. You can do 50 million dollars a year, but if you're doing 50 million dollars a year and you're just maintaining cashflow without profitability, I'd rather take a $25 million business that's cash flowing and profitable and growing. Those two companies and what do they say? Revenue is vanity. Profit is sanity, but cash flow is

 

and you know all those pieces.

 

Jerry (30:00)

You know, I just want to give you one quick example, Mike, is I had a client where, you know, they were so in tune with the day to day and they weren't able to bring in enough backlog and within the organization and build relationships, right? So I introduced two new positions that they can put in there.

Jerry (30:17.902)

that will free up time for them because they are the face of the company or a small organization to go in and bring in those relationships. And like, yeah, but now I'm adding overhead and it's going to lower my profit margin. I said, no, you're bringing in additional backlog and we work through the numbers and these smaller positions that were only 20, $30,000 a year that added up to be 50, $60,000 a year.

 

And I said, if you bring in X amount of backlog, you're to be bringing in millions of dollars more work at a 10 % profit margin. And they're like, wow, I never thought about it that way. I said, you're so stuck into being a doer of the business, and this is why you need to step out a little bit and understand that. And they're bringing in their kids now. So now they want to build that structure. luckily, they are the type of people that are thinking big like that, you know? And that's what's important.

 

Michael (31:09)

Let's dive into that a little bit more because you talked about the org chart and you talked about the functions inside. know, so I like using both the org chart, but I also like using a function accountability chart. The org chart is who reports to who and where does the flow go through? But the function accountability chart is who's in charge of it. You know, like you said, there can only be one name accountable for each thing. If you have 15 people accountable for business development, then you have nobody accountable for business.

 

That's best you want.

 

And the second thing out on the jobs, you know, if you've got five different supers on the same job, you're going to be in trouble on that job pretty fast. So, but that same function accountability chart, I bet when you match that up, when you're talking about functions and you're talking about the org chart, it really helps people to plan for both succession and for growth. Cause they can look at the, you can look at the function chart. I can look at the function chart and the org chart together and be able to say, have you thought about this?

 

Jerry (31:47.166)

Yeah, yeah right.

 

Michael (32:08.472)

putting this person in here or there's another function that you don't even know exists that I've utilized in five different companies that does exactly, know, the example that you just pulled out there, you know, you can input some new functions inside of there. And basically all you're doing is it doesn't always have to be an investment into another excavator or into another piece of equipment. Sometimes the investment needs to be inside the piece.

 

Jerry (32:34)

Absolutely. absolutely. Without a doubt. And it's really being clear on your expectations for this individual as well. If somebody doesn't know what they're expected to do, I listen, I hate to say this, but it is really the truth. salary employee doesn't have the pressure of paying off their debt for the business and all the equipment and so on, right? And again, I say this a little loosely, like,

 

they're gonna do a little bit more of the minimal that they need to do to keep their job. Then you have the exceptional ones that go above and beyond. Those are the ones that really go up in their career path, right? But if you're not clear on the expectations of each of your employees, they're just gonna run wild. They're gonna run wild until you slap them on the wrist and tell them, hey,

 

You know, this is what I'm expecting for you to do. And most don't even do that because most are willing to have those hard conversations because they don't want to rock the boat because they think that if that super is going to leave the job, the job is going to fall apart. You know what? Maybe sometimes it's best that certain people leave, you know, because you're setting the tone for the business that you're expecting certain outcomes.

 

from each of your employees. And you set those expectations through KPIs and letting them understand what success looks like in their position as well.

 

Michael (33:58.444)

Yeah. And simply put, those are just, you know, job descriptions or scorecards you might call them. And that if somebody doesn't have an expectation sheet of what they're supposed to be looking for, it helps in a couple of areas. It helps you in hiring because you know what you're looking for when you're out there. And when you're having meetings, every one of these owners is, they're not just in the construction industry, they're in the people business, right?

 

Jerry (34:23)

Of course, of course.

 

Michael (34:24)

And you and I have talked about that several times. so it's like, you could, know, the, of the best owners, they know how to grow people, not just, not just do business development.

 

Jerry (34:34)

Right. yeah, mean, you know, you look at these multi-billion dollar year companies, they all have trading budgets, right? You know, there's the old saying, well, what happens if I spend money, invest in my people and then they leave me? But what happens if you don't invest in them and they stay with you, right? You know, they're going to be that much less productive. Yeah. It's crazy.

 

Michael (34:55)

What is your answer to that? love that. Say that one more time. What if I invest in them and they leave, right? And what's the flip of it?

 

Jerry (35:04.876)

What happens if you don't invest in them and they stay with

 

Michael (35:08)

Yeah, so what is your answer to that for people? How do they create an environment where employees want to stay?

 

Jerry (35:16)

Bruh, well, we'll stick with the training you mean?

 

Michael (35:18)

Yeah, stick with the training, like they want to be part of this company. How does an owner make sure that the people that they're training and growing and moving up the ladder, how do they make sure that they stay?

 

Jerry (35:29)

So this is certainly one of my superpowers and I'm so glad that we brought this up. know, having worked in the business for two decades before I broke away to start my own business, I've held all those positions and I've worked for, I've worked in cultures where, I couldn't wait to go to work Sunday night into Monday. I couldn't wait. I've also went through a certain amount of years, I would say a solid three to four years. I was having a lot of trouble waking up in the morning. I was like really depressed.

 

Jerry (35:59.234)

So I've seen both sides and I can relate to why someone, why I wanted to go to work was because we were in a real collaborative environment. If somebody pointed a finger to someone else, that got squashed instantly, okay? If the project managers blamed the estimators for the financial, for the lack of financial performance on a project, that got squashed immediately. It was all about collaboration. It was all about leadership. It was all about

 

bringing us together as a community, even after hours as well. I mean, we were at a point where we were inviting each other over for our family functions, you know? That's how great the culture was. On the flip side, the leaders themselves were pointing fingers to the employees because the lack of, what are you, so you supervise me and you're pointing your finger at me? Why don't you ask me where you can do better to support me so I can bring the,

 

So I can bring the expectations that you're looking for, right? So I think that's what's important to building it. And it starts with every, it starts with each and every, it starts with, it goes with each and every conversation you have with your people. Day in and day out, every conversation you allow something to slip is another conversation that you're building a culture where, okay, you know what? The next time Jerry asks me for that, for that, for that answer, I could just shrug my shoulders again. He'll be okay with it.

 

Right?

 

Michael (37:26)

Agreed, agreed. I think the word that you used earlier as we were talking was the word trust. I think that happens a lot inside of creating a good culture. Are we creating a culture where we trust each other to have each other's backs and that I can have the tough conversations and I can question somebody's response to things or I can question their...

 

Michael (37:49.172)

you know, motives or their where they're going with things without feeling like I'm going to get retaliated against or that I got to worry about my job. It just becomes their trust in conversations and we're communicating at a higher level. And that's a lot more fun to be around than if I'm always worried about, you know, every time I open my mouth and question things, I get yelled at.

 

Jerry (38:11)

Yeah, right. Well, that's another thing too is you can't yell and you can't scream at people because again, if you're supervising that individual and you're leading that individual, you are responsible for that individual's success. I was told once when I just started working and I just started to manage my own crews is that, Jerry, don't think that the higher you go on the corporate ladder and the leadership ladder, the less people you work for.

 

It's the opposite. You work for more people. People are relying on you to make great decisions because their careers rely on their, their, their, you know, where they're going to go and how they're going to get promoted relies on your decisions as well.

 

Michael (38:53)

I love it. That's so true. It's so true. You may have less people reporting to you, but you're actually working for more. You're serving everybody beneath you.

 

Jerry (39:03)

That's the right word, Mike, is you're serving more people and you need to have that mindset. So if someone comes to you and they don't have the answer to a certain problem that you genuinely feel that they should, instead of getting mad at them, you say, well, what can I do to support you so next time I ask you that question, you will have an answer and let them speak, right? But now follow through and make sure you support them on.

 

Jerry (39:31.79)

You know, everybody thinks that training needs to come with a financial cost. Training comes with mentoring, assigning a mentor to someone as well. There's a lot of things you can do within the organization where you don't need to put aside an actual physical financial budget for as well.

 

Michael (39:49)

 Let's talk about, I know this is about succession planning, but one of the skills, one of the skills that everybody needs to learn in the business and the leadership team is talking about cash.

 

What are some of the things and some of the stories? mean, examples of somebody that they were running thin margins, they were running, you they weren't as profitable as they could be, or they were running out of cash flow. And what were some of the techniques and things that you put into place to help them see things differently? You know, do you have an example of somebody, you know, no names or anything, but like you're working for a business and here's what was happening from a cashflow perspective and then how you help them to turn that around.

 

Jerry (40:25)

Well, naturally, naturally, the majority of the contractors I work with are subcontractors who self-perform their work, meaning they have their own crews, right? And they have their own manpower to actually perform the work. So one of the best ways a subcontractor can make more money is by actually cost tracking their labor, which a lot of them don't. And then a lot of them like, yeah, I got that under control. And then when I start diving into it, they have nothing under control.

 

You know, you have to understand something too is that the person that's inputting is typically a person who's untrained and has no idea what they're doing. They're doing it on a Friday afternoon. They just want to get out of the job site and they want to go home and they're fudging all the numbers and they're just throwing numbers in. So guess what happens when there's garbage in, there's garbage out. So that's the number one way. And then the next way I would

 

Michael (41:16.82)

Let me get, can you go a little deeper in that? Because I think there's some gold in what you're talking about, but I want to make sure that people are catching it. What are some of the things that you're looking at? If you're diving in the numbers, you know, what did you call it? You called it cost for the cost track. 

 

Jerry (41:34)

labor cost tracking labor.

 

Michael (41:36)

When you're going into labor cost tracking, not everybody going to get so dive into that, tear that tear that one apart a little deeper.

Jerry (41:43.07)

So there's two sides of that. There's the financial accounting side of it, which is like WIP reports, which has everything else in it. So the WIP report is everything on the project, the equipment, the materials and so on. Accounts receivable versus accounts receivable, accounts receivable versus accounts payable with a forecast to project completion. So there's the financial accounting side of it. Then there's the project side of it, which is really my

 

is really my expertise and how I dive into it. I like to strictly just track labor because if you have proper equipment forecasting and that's a separate conversation where equipment forecast and looks that's pretty it's a lot easier and then there's a material right so there's the whole lean principles that are behind material you shouldn't have you know you shouldn't be buying material that you need six months from now.

 

You should be buying material that you need kind of within a couple of weeks, whether it's a long deal item or not. You know, now with the whole tariff situation, things are changing as well. But focusing on labor cost tracking, each of your scopes of work needs to be broken down properly. And your people out in your field and your laborers out in the field need to go into each of those buckets, which is each scope of work. You can't leave anybody out. They need to be put.

 

even if you're not productive because of mother nature, they need to be put into a bucket because the labor is there. It's being charged to the project, right? So every labor needs to be into a scope of work. And then that's being done either by the supers of the form and depending on the size of your project. And that needs to be checked against your payroll. And it needs to, and then there's several steps in order to get it to what I call a dashboard where now you're comparing from

 

do.

 

Jerry (43:33.878)

your budgeted unit prices, your budgeted is your estimated unit prices, and then every week you're putting in your actual unit prices and actual labor. And then at the end of that dashboard, there's got to be the story that's being told, right? That story is, is the unit price above budget? Is it below budget? Is it on budget? If it's above budget, now you're not finding out six months down the line that you need to, my God, we're not making money. No.

 

you're finding out on a per on in real time on a per week basis. Sometimes it's a busted budget, know, estimators do make mistakes. Sometimes your your your project is making is doing rework or change orders and nobody's tracking it. Well, instead of finding out six months from now, let's find out on a per week basis. The power of cost tracking. And when I start diving into this with the contractors to say that they're doing it, they're not doing it too well. Right. 

 

Michael (44:31)

So how hard is it to help somebody make that shift and teach the the supers and the foremen to be able to make that stuff happen so that they're getting good numbers.

 

Jerry (44:40)

So, know, Mike, there's two sides of that. And this is what I've really learned in consulting is, and now I'm shifting to more coaching is, hey, I'm going to show you how to do it and I'm going to teach you how to do it. And I'm going to be crystal, crystal clear on the importance of it and how it will transform your business.

 

But it's up to you to hold yourself accountable and to do it day in and day out. And then I tell the leaders of these people that are doing it day in and day out, it's up to you to hold them accountable as well, right?

 

Michael (45:19.128)

But it's not that hard. It's just...

 

Jerry (45:21)

It's not hard to do. Everyone thinks it's more paperwork. No, it's not more paperwork because if you're doing it right, half of your fire drills are going to be gone. Half of the conversations are going to be gone because naturally when you're doing it, you're engaging in conversations you normally wouldn't have because you're not worrying about it after the project that you lost money. Well, why did we lose money? You're worrying about a day in and day out on a per week basis. So actually your fire drills are going to get reduced if not almost

 

by 75, 80%, you're always gonna have fire drills. It's a construction project, right? But it's actually, you're actually introducing more paperwork the first couple of months, but when it starts to work, you're gonna realize it's gonna make your life a lot easier.

 

Michael (46:05)

Yeah, and this is something that definitely really speaks to the construction industry. And I think that's one of the number one skill set that needs to be learned out in the field of how am I taking the numbers in the field and comparing them against the estimates that were done so I can know whether I'm on track or not because

 

What if it's the estimating, it could be the estimating's fault. It could be problems in the field, but it becomes very evident for you to be able to start to coach that stuff once you see the numbers. Without seeing the numbers, you can't coach it.

 

Jerry (46:37.332)

Absolutely, you know and a lot of and this also goes back to estimating because you're now you're developing strong historical data for estimating and Estimators there a lot of them are are they're so pressed to put bids in and they're banking on outdated unit prices, right? So this one topic it blooms into so many other different topics and you know when I just started my business I wanted to be a part of the nitty-gritty of the day to day and I realized you know what?

 

I'm not their supervisor, so I need to lean more on the leaders that are supervising these individuals as well. And that's where I'm going to have the largest impact for the organization as well.

 

Michael (47:15)

And for those that aren't in the construction industry, I think at the end of the day, you know, it's what are your costs and what are your profit margins and whatever you do, whether it's manufacturing or a service work, keeping an eye on your costs and the profit at the end of the job is super, super important. And I know, you know, everybody will say yes to this, but do you have the systems and processes in place to make sure that you can see the difference?

 

from week to week, month to month, day to day, whatever it takes so that you're increasing those margins. A lot of times a 1 % increase in profit.

 

Jerry (47:55)

I spoke to a business owner a few weeks ago he says he grew from 40 million to 70 million overnight within one year he says Jerry doubled my revenue I doubled my headaches but my profit is just the same your structures got to support that before you get to that right

 

Jerry (48:10.958)

many they're buying all this equipment they're they're they're they're they're going from a 2,000 square foot house to the 5,000 square foot house they have a two three years of successful work and the next thing you know one of those jobs that they picked up went real south and everything falls apart as well so you know i mean listen everything that we speak about you know i'm leaning on construction because that's really my my main background but it's the core to any business right you know you know how many times people tell me jerry why you just focus on construction i don't i do it because that's my

 

my background, but it could be it's the same thing for any kind of business. Right. And I'm just gonna have one more thing, Mike, what's really important with any of these topics we're discussing, and I know the main topic is the session planning is the power of having an unbiased opinion and perspective to any challenge you have.

 

Right? So back to having so much, so many emotions are tied to people's decisions. And when you could have someone who has an unbiased perspective, who's not a part of your day to day grind, who's not part of those emotions that you go to every day, to kind of paint a different picture of a challenge you're having, think about it. Something that's been eating you up, that's been keeping you up for the past three months, someone with an unbiased opinion. I've had business coaches for years.

 

Something that kept me up for the past couple of weeks, I'll jump on a call and within 20 minutes they helped me solve a problem. wow, I never really thought about how easy that was. And it really is that easy for someone, for people like us with that unbiased opinion, you know? Number one, well then you don't need me. For the next 30 days. I think it's one, how badly do you want, do you understand and want the change, right? Goes back to that whole culture-able thing. And two, it's

 

It's understanding if you actually truly, genuinely have a common ground and have you ever had those conversations where, hey, you know what? We built this name for 40 years. This is part of our legacy. These are our non-negotiables. Understanding the common ground and what those non-negotiables are. And then really being crystal clear on what the vision of the company is for the next couple of years. Do you really want to grow it or?

 

Jerry (50:30.04)

Do you, mean, you have to grow it to stay ahead of inflation, right? So how much do you really want to grow it? What are the non-negotiables and what are you willing to give up and not giving up, which goes along the lines of where am I, where will I be coachable and where will I not be coachable? It all starts with a deep dive and a deep dive is just people like us asking a lot of really good questions. And surfacing law is stuck down there that people don't really want to talk about. So my website is www.

 

Pro-ACCEL.com. I'm hot and heavy on LinkedIn, I post seven days a week. And you could also send me an email, jerrywoodajay. Or you can go to my website and contact me through there. Thank you, Mike.