Do you have a succession plan in place? How do you ensure that the right person is in the correct position? In this episode, Eric Anderton paves the way for Rick Chowdry, the President of Intech Mechanical, to share his step-by-step guide to crafting and executing a winning succession plan. Rick’s priority is ethics, and the key to his success in business. He suggests that when looking for a potential leader, we should look at the intangibles, like character. Rick also looks at those individuals who value people and differentiates those who truly value people from those who are transactional to people. For a more in-depth discussion, tune in to this episode now!
Purchase Rick’s book: I Sh*t My Pants Again and So Did You.
Purchase Eric’s book: Construction Genius: Effective, Hands-On, Practical, Simple, No-BS Leadership, Strategy, Sales, and Marketing Advice for Construction Companies.
Are you a Construction company owner that’s looking for outside help to build and/or refine your succession plan? Let’s talk about how I can help. Contact me at my website.
https://www.linkedin.com/in/rick-chowdry-9116627/
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Succession Success: A Step-By-Step Guide To Crafting And Executing A Winning Plan
Being introspective, starting early, and getting over your fear of conflict are three of the lessons that my guest, Rick Chowdry, has learned as he has built his company and put together a succession plan for passing the company on to the next generation. He is the President of Intech Mechanical and has over 30 of experience in plumbing and pipe fitting. This includes field experience in heavy commercial projects, hospitals, university labs, office buildings, and all that good stuff. He has built a company. He is going through the succession planning process in real-time and real life now. He is going to tell us all about it on the show. Enjoy my conversation with Rick.
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Rick, welcome to the show.
Thank you, Eric.
I wanted to have you on the show because I know you are right in the middle of executing a succession plan towards the end, as opposed to towards the beginning. I like to have you introduce yourself and your company to our audience as we are kicking off this discussion.
My name is Rick Chowdry. I’m the President and Managing Member of Intech Mechanical Company LLC. I’m glad to be here. I appreciate it, Eric. Thanks.
Give us a little bit of the history of Intech Mechanical.
I started in 1995. I was a project manager for another company. It was born by accident because prior to that, in ‘92, ’93, and ‘94, I was doing side work to try to make ends meet. I was doing plumbing and pipe-fitting stuff out on the side to make the family budget work. I had two kids. As I did that, the size of the jobs got bigger. It became more than just a water heater change-outs. I decided, “I better get licensed so I don’t get in trouble.” They got a little bigger, then I thought, “I need workers’ comp and general liability. I needed to have people to help me.”
What happened was I got a side job that was big enough that the company that I was doing it for said, “You can’t do this after hours or Saturdays.” I had the decision to make. I said, “I will go ahead and do the job. I’m going to have to quit my job.” I went to my boss and I said, “I got to quit because I got this job I got to do. Thank you.” I handed in my keys, pagers, and all of that stuff because this was 1995. I thought, “How bad can this be? I might as well give it a whirl. That’s what happened.
I quit and did this job. It took me about three weeks to do. It gave me enough money to stay alive for two months while I got other things going. Intech was born. That’s how it started. I kept bidding work. By December 1995, I had maybe six employees. We were doing stuff and it has grown from there. Fast forward now, it is a big machine with a couple of hundred people, fully mechanical, service and controls, and all this other stuff going on. That is the rough history.
Back then, when you were doing side jobs, did the guy you were working for know you were doing side jobs?
Yes. As a matter of fact, I even would buy material from him to do the side jobs. I would purchase pipe and fittings. At times, there were certain tools I didn’t have. I would rent them from him. There was no hiding it. That would have been unethical to do.
Did you always want to start your own business, or did you slide into it because you saw that you could do it?
I didn’t always want to start my own business. I wanted to be a pastor. Starting my own business was probably the furthest thing from my mind. I fell into it. As I described it, it was an accident. I didn’t have any money or a business plan. The way I looked at it was I thought the money I was going to make will keep me alive for two months. I thought the worst thing that could happen is if I fail, I can always go back to work for somebody. I have some pretty decent capabilities. If I fail, I will call one of my competitors. Somebody will hire me because I knew them. I wasn’t that worried about working.
What do you think was the key to growing from one guy doing side jobs and starting a business to a company now that has 200 employees? You guys have been in business for many years now? What has been the key to your success?
I always had this priority of ethics and how we treat people and doing what we say we are going to do. That has been the key. Our number one value is to treat everyone the way we want to be treated. I know that can sound cliché. A lot of people say that, but it is not a cliché here. We live by it, drive it, and hold people accountable for it. It has always been the most important thing to me. That priority and the other technical parts of the business, if you do those things, other things tend to take care of themselves.
It is something we have all heard before. Can you give me a specific example in a business context of when you treated someone the way that you wanted to be treated, and it cost you something? It was painful to do it, but you knew it was the right thing to do, and therefore, you did it.
We did a job 5 or 6 years ago. You finished the job, and then you have a one-year warranty. This particular project was out of warranty for three years. It has been a while. There started being some problems with some copper. The light went out. There were some problems with the copper and solder joints. This was a place where there was a transition to this different flux that we used when we solder. There were some solder joint leaks that were starting to occur in the building when it was way out of warranty. I could have taken all kinds of postures and said, “It is the flux,” or whatever.
Solder joints should last a million years. They should last until the building falls down. I said, “We are going to fix every single bottom line. You need to call us if you see something. I will have somebody out there, and we will take care of it.” We have and it costs us $50,000 or maybe more than that. I have to look at the job cost because I categorized it separately.
In my view, if I purchase a building, and I own some properties, I would expect somebody to stand behind it, not be an insurance claim and not be a pain in the butt. I would want my building to be okay. That is how I looked at it. We have taken care of it, and it is a done deal now. I know the owner deeply appreciates that. That is one example of many.
The reason I asked you that is because, in every company, we put our values together. It is when those values are painful, and they cost us money or something beyond the regular way that we live or act that it demonstrates real values to us, and not just the talk that we put on our website.
I have always said that everybody has integrity until you have to write a check too. That is the answer. When you have to write a check, we all start rationalizing, justifying, and looking at the contract and paragraphs 12.2.6. There is my out. I’m looking at that going, “We all know what is right and wrong.” Regardless of what a contract says, there are certain things that just are, and you need to do that. That is what I always try to do.
I will tell you a story because that resonated with me. My 8-year-old son is messing with the garage. I didn’t see it, but he somehow pulled it off the tracks. I called the garage door guy out. He had just installed the garage last year. I said, “It came off its track.” He looked at it and said, “This can happen in many different ways.” They came out fast and fixed it.
I had a moment there where it would have been easy for me not to say anything. He said, “I’m not going to charge you for this.” I said to him, “My kid hung on it. You should charge me.” He said, “That is okay. I’m just going to ask you to give me a review on Google.” My point is I had that moment of decision right there where I was going to tell him that this was my fault. He had installed the garage. It could have been like, “It fell off the track. That was your fault.” It is interesting. Everyone has integrity until it costs you money.
That is the bottom line. We have integrity until we don’t. Those moments happen at $100 decisions and $100,000 decisions and even more sometimes.
I’m going to do something, Rick. I never do this. I’m going to do it quickly. If you are in the greater Sacramento area, the name of that company is Pure Garage Door Services. The guy’s name is Alex. If you need a garage door or something fixed, you got to look him up because he is good.
That is a good thing.
Let’s dive into this idea of succession. You have built this company. Some people build these great companies, and then they were like, “I’m done. Off I go into the sunset.” In your thinking, What makes you want to have Intech go beyond yourself and the work that you have done?
It boils down to treating everyone the way you want to be treated. That is an okay exit strategy depending on if the company is smaller and folks are going to land on their feet. For me, it is a big machine now, and there are a couple of hundred people. I feel like I have a responsibility to those people. They trust me. They are here because of the culture. A lot of them would tell you that they are here because of the culture and what we are, not about what we do because we have competitors that are as capable as we are. Maybe some of them more. People are here because they value our culture and such. I feel a responsibility to them.
Succession, rather than shutting it down and putting people out to the four winds, I feel like I need it to continue. The best thing is for it to continue and not only do that but be better than it was when I was running the show, which I still am. That is why I didn’t shut it down. It boils down to a responsibility to the people and trying to do things in everybody’s best interest. That is in everybody’s best interest if it continues and gets better.
How did you start the process then?
I started the business when I was 30. People started talking to me about succession shortly after that. When you are 35, you go, “Get out of my face because I got stuff to do, and that is 100 years from now.” It crept up on me, honestly. It was 2014 with my accounting firm, BFBA. Craig Boyce is a friend of mine, a climbing partner, and all of that. He said, “Rick, we now have this model that we are trying to transition construction companies into. It’s an LLC model.” We had been a C-Corp, then we were an S-Corp and then became an LLC.
Craig described this whole LLC model to me. He put the flow chart in front of me. That was where succession started to take traction because the LLC model that we became lends itself to succession. It is a lot easier and simpler. It has less tax consequences and a lot of different things like that. You have a lot more flexibility to bring people into a position of leadership. We don’t have to get into the mechanics of it, but that’s where I started getting traction and where it became a thing.
When we became an LLC, I was able to bring Gary Myers, who is one of the vice presidents. We bring him into membership of the LLC with a percentage of profits interest that I had promised him when he came here. From there, you have this basic infrastructure in place that lends itself to this. It becomes the process of identifying the humans that are going to sit in the seats because, from a tax and another standpoint, the LLC lends itself to succession well. At least, in my experience, it has been good. We have already started it, and it is working.
For the audience, in episode 125, I have Craig Boyce and Noli on the show. The name of that one is Exit Strategy Experts: How to Structure and Execute a Transition for the Next Generation. If you want to check that out for more details about the LLC model, feel free to do that. Let me go back. You started with the structure of the deal before you went to people. Is that right?
Yes, and to the extent that I started with people. Prior to that, Gary Myers came here from a competitor, and he was a big gun guy. I had to make some promises to him. I said, “If you come here, I will make you have an X percentage interest in this company when we are able to pull that off.” That happened first. The LLC model came into being right behind that. It gave me the vehicle with which to do it.
There was at least one person that was identified ahead of the model. He wasn’t going to be the end-all-be-all because there were a lot of other things that needed to happen in succession. At the time, I was not thinking about succession. I was thinking, “This guy has some confidence that we don’t right now.” He is filling an empty seat on the bus. It is what I was thinking and not succession specifically.
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This is Eric. Quick mid-episode break. I hope you are enjoying my discussion with Rick. Rick and his company are clients of mine. I have helped them with their succession planning using the framework that I use with all of my clients when it comes to succession planning. I’m going to put a link to a testimonial letter that Rick has been generous enough to give me about the work we have done together. Click on that link. Learn more about the succession planning process I use with my clients.
If you are the president or owner of your construction company, and you like to discuss with me how I might be able to help you with your succession plan, feel free to go to my website, ConstructionGenius.com/contact. Put in your details there, and I will contact you. We can book a short ten-minute call to figure out how I can help you. Let’s go back to the discussion with Rick.
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As you are going through this process and you got the model in place, or you have selected the LLC model as you are describing, how did you then begin to think about the people who would fill the seats and the next generation of ownership and leadership in the company?
What you start doing is when that is in place, you start looking at the people that are coming through and the different positions you are hiring. You start looking for the intangibles of what it takes to be a part of the leadership of the company. In other words, you look beyond competence when you are trying to hire a project manager. Let’s use that as an example. You are looking beyond their project management skills. You are thinking, “How is this person put together? What is their character like? Are they one of those people?” It changes your paradigm. You start looking deeper.
Look beyond competence when you are trying to hire a project manager. Click To TweetWe always tried to hire character. We have hired people based on character and not hired people based on lack of character, at least in our estimation. It makes you focus differently. I have people who are theoretically down the chain in little ways, in other words, in their position in the company. I look at them and I go, “That person has the magic. They have the leadership and people skills.” You are always aware and on the lookout for it.
Let’s talk more about that. In your mind, give us a little more specificity on some of those intangibles that you described or that magic.
First of all, the number one thing if you are going to be in leadership in this company is you are going to maintain the culture and the personality that is here. You need to be a part of it and you need to buy into that. You need to buy into the treat everyone the way you want to be treated culture. The other thing I look at is how they value people. It’s not what they say but what they do. I would differentiate between valuing people and saying you value people, but your interactions with folks are transactional. That is a good term that I use.
If you are going to be in leadership in this company, you will maintain the culture and personality that is here. You need to be a part of and buy into that. Click To TweetSome people are transactional. In other words, people are a commodity and do a transaction. They were like, “Dude, give me this.” That is part of day-to-day life, but there is a difference between getting work done and truly valuing people. I look for that because I value them. Whoever is leading this machine when I’m gone, I want them to value people, but I also want them to value excellent work. It is not that we are doughy fun. This is not an amusement park over here. With that value, we expect you to value us, conduct yourself accordingly, and be the best of the best. It is both things.
How do you balance that? A lot of companies struggle with this because they do want to value people, but this is a business after all. If they are not performing up to a certain level, I can’t keep giving you money. How do you strike that balance?
What I try to do is use the same values that I have and apply them in reverse. Meaning I’m going to treat you the way I want to be treated. I expect you to do the same. Part of that is to work like it is your money. Bust your butt to do what is right, do what is best, and treat it like it is yours. Treat me the way you would want to be treated. If I worked for you, you would expect me to do everything in my power to do my job to the best of my ability, to guard the company’s assets, to make sure profitability is what it should be, that the work product is what it should be, and all those things.
I apply the treat everyone the way you want to be treated in reverse. If you don’t do it, you can work for somebody else. We will move on. I don’t want to represent it like it is an amusement park of Rick’s good time fun place. It is that, but you have to perform to be a part of that. Way back in the day, we used to tolerate things a lot longer. We weren’t as fast at taking care of problems with personnel as we are now. We are a lot quicker at it.
Let me ask you about that because that is one of the issues that a lot of construction company owners have. They are not fast enough in dealing with their people problems. What incident or insight did you get that has helped you to speed up over the years so that you are not tolerating that poor performance for an extended period of time?
In my nature, and when I was younger especially, I was people-pleasing and conflicted avoidant. After being punched in the mouth financially a bunch of times, I’m just not. What makes people slow is laziness or conflict avoidance. Conflict avoidance is a problem for humans. If you’re a decent person, you don’t want to have conflict. None of us do.
Healthy conflict creates character. It elevates your game and other people’s game. Getting past the idea of conflict avoidant and going, “We need to hit this head-on.” Here is what you do. You have a person who is performing in a certain substandard way, and I have done this 100 times. You rationalize and make excuses. You do anything you can to keep from dealing with the problem. Because they are doing 75% of their job well and this 25% is a train wreck, you try to make a value judgment. You are like, “What if I get rid of this person and the next person is a 50% train wreck.” You do all of this mind stuff.
I have gotten to where I make those value judgments a lot faster. I make other people make them faster. To my people in leadership, I talk in a respectful way but I don’t sugarcoat what our problems are, and I expect them to do the same. We are a lot better at it. I don’t represent it like we are perfect. We still screw it up and don’t do it fast enough. We aren’t perfect, but we are a lot better.
What is important is that idea of progress and specifically that idea of getting over the conflict avoidance and that rationalization that you described. That is something that a lot of construction company owners wrestle with. I appreciate you diving into that. You got the structure in place. You got at least one person identified who you like to have in that next generation of leaders. What has been your biggest challenge with the succession process over the last few years?
The biggest challenge has been identifying the people. I have this joke about construction being third-grade math, third-grade English, and a PhD in Psychology. It is finding the right people. You end up with competence and not the right character or leadership skills or the reverse. It is finding those few unicorns that have the whole package and value the culture. That is the kicker that is hard to find.
The singular challenge is identifying the people. If you hand the keys to somebody, and you walk away and think you are going to drink an umbrella drink in the Bahamas, you are going to come back to a train wreck. If the business doesn’t continue and maintain its profitability and be successful, you are going to either not get paid, or you are going to have a train wreck, and you are going to have to come back and fix it. It is important. I can’t overstate how important people are and what happens on a go-forward basis.
You are a catalyst for your business. One of the big challenges that someone in your position has when it comes to succession is they like the idea of it in theory. When it comes to selecting the right people, beginning to release control to them, and giving them the authority that they need to learn the lessons they need in order to be successful owners of a construction company, that is where they struggle. What has been your biggest struggle with that idea of control and authority as it relates to developing them into future owners of your company?
It boils down to trust and deciding that you have identified a person and you are going to trust them with this important task. You can be foolish. Being trusting is a good thing, but you can also be foolish with it. It is coming to that place where you go, “This is that person. I’m going to trust them. I have identified and vetted them. Now, let me invest.”
In addition to that, investing in them, you have to have almost a culture of training and investing where you are spending time with them. You are going over your financials. You are doing all this day-to-day stuff where you were like, “This is what I would do in this situation.” They see how you carry yourself, how you deal with conflict, and how you deal with personnel issues. It is trust and investing if I was boiling it down to a couple of words.
Let’s talk a little bit more about trust. What do you think are some of the keys to establishing trust in a relationship as it relates to your business?
The key is getting past the honeymoon phase of someone working here. People that get hired are like a marriage. You first get married and it is like, “This is the greatest thing.” When you get six months or a year into it, it is like life. Everything gets real. It is not whatever or the reality set in. There is the grocery shopping, you squeeze the toothpaste from the middle, and you don’t fold the towels right. That is true in the hiring process. You hire somebody and you go, “This is the second coming of Jesus.” Six months in, you go, “What was that?”
It boils down to understanding the reality of the person and having gone through those because the more conflict and the more resolution to the conflict, the more you see the things that aren’t right. They see the things that aren’t right about you, and you work through those things together. That builds trust. There is a certain amount of time that has to pass. Somebody has to be here at least a year or maybe more for you to see what they are all about. Mike Friesen is one of the VPs here. He is on his way toward retiring out of here. As always say, “It is eighteen months. I don’t even want to talk to you until eighteen months are up, then maybe we are all right.” There is the amount of passage of time that has to happen.
It is the passage of time, and in that passage of time, you get to know someone. It is one thing to tolerate someone’s weaknesses when it comes to being an employee. It seems like it is another thing to tolerate those weaknesses when it comes to being an owner, particularly when it is going to hit you in your pocketbook if this person screws up, not to mention your reputation and legacy. Are there extra layers of trust that need to be built there before you are willing to invest in the person in terms of ownership in the business?
Yes, it comes down to their character. What I would say about their weaknesses because we all have them is how they deal with their weaknesses. Do they make excuses? Are they straight about it? Do they understand it? Are they honest? Do they know? Secondly, what steps did they take to backfill the weaknesses, and what do you ultimately have to do?
What should be active top of my mind is, “I don’t do this well.” That is an understanding of your own stuff. I don’t do this well, but I do this well. I need people that do this to plug the holes. I look at someone’s ability to understand who and what they are and to be realistic about what they do and don’t do well, and the humility to say, “I need help in this situation.” Where I trust somebody is when they go, “I don’t know what to do here.” That is where I start trusting because I know them almost.
If you had to start the process of your succession plan knowing what you know now, what would you do differently?
I’m not sure I would do much differently, but I think I would start soon. I don’t think it is ever too early. What I would do is I would start sooner. I would have started almost at the beginning if I had understood it. I understood it when I was 30 years old. I would start it much sooner and build it into the fabric of the company. It would have had that succession and the idea of everybody coming in and having the opportunity to elevate, depending on what their propensities are. I would have done that very early. When that is in the fabric and culture of the machine, it draws better and more qualified people. The thing I would have done differently is put it in the fabric starting.
How much longer do you think you have in the business before you are able to exit, all things being equal?
I’m hoping for three years. That is not a hard number, but three years is what I’m hoping to be able to start pulling myself out and taking more of a consulting/oversight role and doing other things as well.
Between then and now, because three years is a relatively short time in business, what are you going to be focused on to make sure that is a reality and that happens?
What I’m focused on is what the structure would look like if I wasn’t here. You have to put those two things next to each other physically on paper. Look at all the empty boxes over here and the structure that if I’m gone, what empty boxes does that create? I’m starting to identify the people that would fill those boxes either from within or without. You have to build the structure the way it needs to look for you to be gone and do it carefully. You sure can get hurt if you get the wrong people in the wrong seats on the bus.
From the top of the organization, what are those key seats you are looking to fill?
The key seats are mostly in project management. We need senior project management type people, good project managers, and field superintendents because that is where the money gets made. Our biggest risk is labor. The control of the labor falls fundamentally on project management and field superintendents. Those are where the seats and the backfillings are so that the people that are doing it now are going to elevate into the position of overall company leadership. They occupy those seats now, so they move up here. You’ll have a vacuum to fill in.
The key seats are mostly in project management. We need senior project management type people, good project managers, and field superintendents because that is where the money gets made. Click To TweetIn construction, we got to get the work, build the work, and get paid. Are you thinking of ownership in all of those areas, or do you have people who are going to take on more than one of those areas? What is your perspective on that?
From the leadership and the profits interest going forward in the LLC, I would like to have the get the work, do the work, and count the work people. I like to have someone from each of those boxes be a part of the ownership of the company. That is ideal because it covers all three pieces. It provides a lot of motivation and perspective. There are a lot of advantages to it. If you don’t do it that way, you are going to leave some holes.
I would imagine that also brings in different types of personalities that can enrich the leadership group of the second generation.
Accountants are different than project managers, and estimators are different from them. They fundamentally are just different. It takes the whole group to make wise decisions to maintain direction. If you have 3 or 4 people who are leading, somebody is going to see things you are not going to see. It is the way it is. I have blind spots. I can’t tell you how many times my leadership group has gone, “It’s this.” I go, “What? I thought that was okay.” I think it is important.
As we are wrapping up here, if you were sitting across the table from another construction company owner and they were asking you, “Give me three pieces of advice for succession planning,” what would those three pieces of advice be?
The first piece would be introspective, measure yourself, and understand what you are and what you are not because I don’t think you can do succession planning without knowing where you are starting from, especially about yourself. A lot of people don’t think about what their strengths and weaknesses are and understand how to backfill those things. Starting early and building it into the fabric is another thing. Get over your fear of conflict and be ready to do healthy and respectful conflict resolution.
I know you are a published author. I like you to tell the audience a little bit about your book because it comes from someone who owns a construction company. Tell us about that.
The book is on Amazon. It was dropped a couple of months ago. It is called I Sh*t My Pants Again and So Did You. The subtitle is A Plumber’s Guide to World-Saving Humility. You can tell the essence of the book by the title, but it is a funny satirical look at the commonality of human beings, all the things that we share, and all the struggles that we have. The essence of that is, should you be prideful? Maybe you shouldn’t, and maybe I shouldn’t because we are all bozos on the same bus. It is short. It is an easy read. It is 50 pages. It was fun to write. I don’t apologize for anything that is in it even now. Some people will be offended by some of it, and I don’t apologize. I stand by everything I said.
As we are leaving here, give us a little bit more about your company, where you are located, and all that stuff if people want to get in touch with you.
We are in Roseville, California. Our website is Intech-Mech.com. We are one of the larger mechanical contractors in town. We do HVAC, plumbing, piping, and process piping. We have a good-sized service department. We do our own in-house controls. I’m glad to talk to anybody that wants to talk to us about opportunities for sure.
Rick, I appreciate you coming in and chatting with us here.
Thanks, Eric. I enjoyed it. It’s good to see you.
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Thank you for tuning in to my interview with Rick Chowdry. Feel free to go to Amazon. When you are at Amazon, pick up his book, I Sh*t My Pants Again and So Did You. It is a beautiful title. I’m a little jealous of his title. It is punchy. Mine is Construction Genius: Effective Hands-on, Practical, Simple, No-BS Leadership, Strategy, Sales, and Marketing Advice for Construction Companies. While you are on Amazon getting Rick’s book, you can pick up a copy of mine.
What people are doing that is interesting with the Construction Genius book is they are buying copies for themselves and their whole leadership team. They are reading a chapter or a couple of chapters at a time, meet on a monthly basis, and discuss the chapters. How are we going to use and apply the learning in our organization to make us better leaders? That is how you get the most out of investing in any book, particularly this book, Construction Genius. Check out that book and Rick’s book. Thank you for tuning in. I will catch you on the next episode.
Important Links
- Intech Mechanical
- Rick Chowdry – LinkedIn
- Pure Garage Door Services
- BFBA
- Exit Strategy Experts: How to Structure and Execute a Transition for the Next Generation – Past Episode
- ConstructionGenius.com/contact
- I Sh*t My Pants Again and So Did You
- Construction Genius: Effective Hands-on, Practical, Simple, No-BS Leadership, Strategy, Sales, and Marketing Advice for Construction Companies
About Rick Chowdry
