Transcript

In this episode of Rattle & Pedal, Jason Mlicki interviews Gil Hantzsch, CEO of MSA Professional Services, about the key speech he delivered to his employees to help put a stake in the ground and express his vision for the firm while they were in the midst of a rebrand.

To start the episode, Gil introduces himself and his firm.

“The firm is MSA Professional Services. We’re about a 350 person engineering, architecture, planning and surveying firm. Our home base is just outside of Madison, Wisconsin and we’re predominantly an upper midwest firm with 16 offices.”

“I joined the firm in 1992 as a wastewater engineer coming in out of grad school and…. worked my way up the ladder….I acquired a team and joined the board in 2007 and then became vice president in 2008.”

“By about 2012, 2013, I was scheduled to succeed the president. In that transition I also ended up taking on the role of the CEO in a somewhat unplanned fashion and I combined those two roles back into one person.”

It’s important to note that MSA is a 100% ESOP firm, which is a big part of their culture. Jason asks what that means to MSA, why it’s important and what that means for leadership transition.

“The ESOP structure forces to deal with departing owners every year. So it’s done in bite size pieces. If we manage it right…we should be able to avoid the ownership transition problems, that is really the primary reason why companies are sold today. And if we have it in our mind that MSA is a good company doing good things and we should be allowed to continue to exist, then it’s our job to perpetuate MSA as long as it can do good for society.”

“From an ESOP standpoint, the employee owners do elect the board. So, the board will nominate a slate, but everybody gets the opportunity to vote their shares. It’s an open process, and from there it’s the board that has the responsibility of appointing the leaders. So not only do you get to vote, but they also have a reasonable expectation to have access to leadership.”

Jason and Gil transition into the main topic of the episode, which the key speech Gil delivered to his employees.

“So a few months ago at MSA’s Employee Ownership appreciation week, you delivered something called the key speech. I guess I want to ask you, why did you pen it and deliver it? What are you hoping to accomplish by kind of putting yourself out there as a leader in this moment and saying, hey, I have this thing I want to talk about?”

“I would say in one word, it’s clarity. It was in the course of our rebranding effort, we had the golden opportunity with that sort of pivot point to get a defining statement of intent out there about who are we, who have we become and who do we aspire to be as a company.”

Next, Jason and Gil unpack some of the content of the speech.

“So one of the things I want to do in this podcast is I actually want to talk about some of the contents of the key speech because I think there’s things in your speech that are really, really sharp. I think there’s a lot of firms that can learn from the way that you’ve framed a couple of concepts around how you see the firm.”

“So, I’ve picked out two or three that I just really liked, some of the analogies that you use.”

1. You describe the firm first as an ecosystem. And then you talk about how the firm is more of a community than anything.

“Full disclosure, the river company is a blatant rip off from a really great book. It’s called the Living Company by Arie de Geus. He describes the river company, it sort of, it ebbs and it flows and it shrinks and it grows as needed and drops of water enter and leave as people do, but the river keeps going on. And so we all enter MSA. We all leave at some point. But if we do our job as stewards, the company will continue on. That’s our goal here.”

“When we get into the community, I think that’s more of an attempt to describe how we interact with each other as people. People use or liken themselves in a company to a family. But five years ago, one of the first things we did as I started to be able to direct the company is we began creating these internal communities of practice, putting like practitioners from across the company together. And as we grow in size and we grow in diversity, all of a sudden, maybe family doesn’t work. So I really took that metaphor and ran with it and really just tried to illustrate that building a great community might be harder and maybe more gratifying than being in a great family.”

2. You talked about the importance of growth. Why growth matters and what it does for the firm. But then you also talk about this idea of the firm remaining human scale.

“We wanted to articulate to people why growth is good and help them answer that question if they’re asked. But then I started thinking, if you extrapolate growth to the nth degree, it doesn’t maybe look like who we want to be. I think about the largest firms in our sector, there are over 100,000 employees. I can’t imagine for a minute what that must feel like. But I don’t think it’s possible in that size of a corporation to replicate the warmth and collegiality that a smaller firm can provide. And then if we just go beyond the feeling, if you look at the industry metrics, these are undeniable. The larger firms will have a lower profit margin. They suffer a much higher rate of turnover than the smaller firms. So there really is a sweet spot out there.”

“I think the optimum size is related to the humanness, the ability to relate to the people in the company and know that, no matter how many offices you are, you’re adhering to the same culture. So this idea of being human scale as opposed to some vast impenetrable bureaucracy where you’re reduced to some kind of a number.”

3. You talk about change. And there’s a quote in here, you say, “If you don’t like change, you’re going to hate irrelevance.”

“It’s a US army general, Eric Shinseki who was credited with that, and I think it’s right on because what I’m trying to get at is, the future’s coming at us faster than ever, right? If you think about the rate of change that we’ve seen in the last five years, it’s the greatest we’ve ever seen in humankind’s history and it’s the slowest rate of change we’re ever going to see for the rest of our lives.”

“But this idea that things will change, we’ve got to keep that in the dialogue because otherwise, people just get too set in their ways. We’ve got to keep people malleable and ready for this really uncertain future.”

To close, Jason and Gil talk a little bit about the Communities of Practice that have been built in the firm.

“Talk about the Communities of Practice a little bit and sort of that choice you made as a leader to actually bake that into the culture and what it’s done for the firm.”

“It was a choice and it wasn’t substantiated by any internal rate of return calculation. It was clearly one of those things that felt like absolutely the right thing to do on a number of accounts. So the results were really intangible, we just thought it was the right thing, it was of a leap of faith. But a year or two down the line, all of a sudden, some tangible results started showing up. We win a large project because the client observed that our group had more passion and they had actual relationships with each other than the other interview teams, and then that project leads to another project which leads to another project. That wouldn’t have happened if not for the Communities of Practice.”

Transcript

Jason Mlicki: Welcome to another episode of Rattle and Pedal. I want to start this podcast by saying that we have recently been on an effort to really interview marketers and CEOs and other practice leaders and firm leaders to really get an insight from them and just some of the challenges that they’re facing and how they’re overcoming them. And if you’ve enjoyed those, that was entirely my idea. If you’ve not enjoyed them, then it’s all McKay’s fault. And as you have noted, I haven’t been on any of these, so this is the first time that I get to do this.

So with me today is of course, Jeff and Gil Hantzsch who is the CEO of MSA, which is a client of ours, so full disclosure there. Gil, if you could, introduce yourself and tell us all a little bit about MSA.

Gil Hantzsch: Certainly. Morning Jason and Jeff and thanks for the opportunity to spend a few minutes with you. The firm is MSA Professional Services. We’re about a 350 person engineering, architecture, planning and surveying firm. Our roots go back to a two person survey partnership in the 1930s. We’ve been incorporated for about 54 years. Our home base is just outside of Madison, Wisconsin and we’re predominantly an upper midwest firm with 16 offices right now in Wisconsin, Iowa, Illinois, Minnesota, and then a couple of branches in Atlanta and in Dallas.

I joined the firm in 1992 as a wastewater engineer coming in out of grad school and I was very passionate, still am about clean water as a drinking source and returning wastewater or used water back to the environment in a responsible manner. So our firm designed the infrastructure that does that. It provides a clean source of drinking water for communities across the upper midwest and then we treat what comes out the other side in addition to all the other stuff we do. So, highways and bridges and airports and things like that.

So I joined in ’92 and sort of worked my way up the ladder. Of course, first it was an engineering challenge, but little by little, it became more of a business challenge as I acquired a team and joined the board in 2007 and then becoming vice president in 2008 and by then it was all a business challenge, I was doing virtually no engineering, but I learned to enjoy and embrace the new challenge.

By about 2012, 2013, I was scheduled to succeed the president. We had a split President CEO at that time and the president was really Mr. Inside, it was the operational role that I felt suited me, but long story short, in that transition, in 2013, I also ended up taking on the role of the CEO in a somewhat unplanned fashion and I combined those two roles back into one person. There were some rifts that had occurred in the company underneath the prior dual leadership and I realized whether I wanted to do this or not, what the company needed me to do was to step up and fill both of those roles. So that’s essentially what I’ve been doing since early 2013.

Jason Mlicki: Now you might’ve said this, the firm is high 100 years old now. Is that right?

Gil Hantzsch: Our roots informally as a partnership maybe go back to the 1930s. We’ve been formally incorporated about 54 years.

Jason Mlicki: Only 54 years. How many leaders have led the firm? Do you know that by any chance?

Gil Hantzsch: I do, yeah. If we go back to that, I guess it’s 56 years. 1962 was the date of incorporation. We had essentially one president or CEO from that time until about the mid 90s. So he had a good long run and then a gentleman, Gil Girdman took over from about the mid 90s until 2008. 2002 was when president CEO offices became split, but he retired in 2008. And then there was gentleman, Jim Owen occupied it from 2008 to 2013 and then me. So, I guess I would be the fourth CEO of the company.

Jason Mlicki: And I heard right, the second Gil, right?

Gil Hantzsch: The second Gil, yeah. Go all my life not meeting another person named Gil and here he was working at the company I came to join.

Jason Mlicki: So now, one of the things that is important I think to understand about some of those leadership transitions is that MSA is a 100 percent ESOP firm. That’s a big part of your culture. So tell us, I guess what that means to MSA, why it’s important and also maybe a little bit about what that means for leadership transition as well. I think that’s an important piece of …

Gil Hantzsch: Sure. I think it was even from the moment I set foot in this company when I was interviewing in ’92 and it felt different than all the other companies that I interviewed. So there’s just a feeling that feels right. I had been coming prior to that from a company where ownership was not possible. So when I learned that MSA was employee owned and there was opportunities for ownership, I thought that was compelling to me. But then there’s this whole esprit de corps that develops when, especially now that we’re 100 percent ESOP owned, back when I joined in ’92, it was a partial ESOP. But people now are really beginning to realize that they’re in partnership with their coworkers, they’re in an ownership position, and they’ve got responsibility now to the well being of the company and that their actions and their attitudes really matter.

I think from another perspective, as I’ve traveled throughout the industry and talked to my peers, I’m always hearing about ownership transition events that don’t always go very well because they’re few and far between, right? You have a founder or a second generation owner and they own the lion’s share of the stock and all of a sudden it’s time to sell and there isn’t anybody who can afford to buy them. So what we do is we work on ownership transition every year. The ESOP structure forces to deal with departing owners every year. So it’s done in bite size pieces.

So if we manage it right, there’s no guarantees, but if we manage it right, we should be able to avoid the ownership transition problems, that is really the primary reason why companies are sold today. And if we have it in our mind that MSA is a good company doing good things and we should be allowed to continue to exist, then it’s our job to perpetuate MSA as long as it can do good for society.

Jason Mlicki: How does leadership transitions work in MSA? Meaning that all the owners don’t have a say necessarily.

Gil Hantzsch: No, they don’t. Yeah, ownership and leadership we’ve always said are two different things. I could be an owner of Apple by buying stock, but I’ve got absolutely no rights to say how they do things. So we talk about those things. But leadership transition has always been, almost always been internal. It’s been very well managed. I think we’ve always done some gut level succession planning within the last five years. We formalized a written succession plan. So, we’ve got somebody identified. I mean, if I step out in the street here and get hit by a bus, who’s the person that’s going to step in and then who are we grooming to replace anybody in a leadership position in the long term.

Sometimes that successor for the short term and long term is the same person. Sometimes those are different people, but it’s always been a fairly seamless. From an ESOP standpoint, the owners, employee owners do elect the board. We’re one of a vast minority. When I say minority, I would say I would bet one percent of the ESOP companies pass through board election voting rights to their shareholders and we’ve always done that. So, the board will nominate a slate, but everybody gets the opportunity to vote their shares. So from that standpoint, it’s been very stable, but it’s open. It’s an open process, and from there it’s the board that has the responsibility of appointing the leaders.

Jason Mlicki: So really, I mean, the ownership does have a say. I mean, the ownership, I mean, everyone at the firm that is an owner has the right to vote on who’s in the board and the board has the right to elect the leadership.

Gil Hantzsch: Going back to this Apple stock analogy, I think you expect more when you’re an ESOP owner. So not only do you get to vote, which I suppose you can vote your shares in a big corporate election too, but they also have a reasonable expectation to have access to leadership. So anybody can and does call me or walk into my office to let me know what they think about things. I think they understand and respect that they may not have the right to dictate what happens. Nobody plunks down and says, I’m an owner, therefore you got to listen to me. But they know I’m going to listen to them. And I get very good feedback and sometimes we change our mind on decisions we’ve made based on listening to good advice from our employee-owners who may see things from a different perspective.

Jason Mlicki: All right, so now you also gave us a beautiful segue in that conversation which I love because you describe, I love the Apple analogy, I think it’s just a really good analogy. Just because you’re an owner doesn’t mean you would barge into the offices and say this is what should be done. That analogy is one that you shared in something that you’ve called the key speech and that’s really sort of the meat of what I wanted to talk to you about today.

So a few months ago at MSA’s Employee Ownership appreciation week, you delivered something called the key speech. Full disclosure, I have not watched the delivery of the speech, I’ve only read the speech. And so, I enjoyed reading it so much. I think it’s actually a really good piece of business writing because there’s so many different things packed into this one speech that I find really interesting. But to start, I guess I want to ask you, why did you pen it and deliver it? What are you hoping to accomplish by kind of putting yourself out there as a leader in this moment and saying, hey, I have this thing I want to talk about?

Gil Hantzsch: Yeah, I would say in one word, it’s clarity. And so what I mean by that is, I described a little bit how I came into this position. It sort of happened all at once and it wasn’t exactly a purposeful transition. It was a transition that needed to happen. So consequently, I find myself one day I’m running the company. And certainly I did not have a crystal clear view of what I was setting out to do. You got to remember, I didn’t go to business school. I’m just an engineer who now finds himself in control of the company.

So I came in sort of as the reluctant leader who needed to step up and fix some problems. I certainly had some vague notions and some philosophies that were forming, and I had been given latitude by the board to do what feels right. When this goes back to being an ESOP company, I mean, I didn’t mention this idea that we can make decisions for the long term instead of having to satisfy a quarterly earnings update. So I was given the latitude to do some long term things.

Now from a distance and that could be the employees of the company, they might see these various changes and initiatives and it might seem a little disparate or unrelated. But they all really stemmed from a consistent way of how we decided we wanted to run this firm in the future. So even though we were ramping up our communication and doing a better job on that than we’d done in the past, I think there was always this undercurrent that people didn’t quite get the vision of the company. What are we trying to do?

So it was in the course of our rebranding effort, we had the golden opportunity with that sort of pivot point to get a defining statement of intent out there about who are we, who have we become and who do we aspire to be as a company. So I really had the opportunity during Employee Ownership Appreciation Week in the same year that we did our rebrand to try and coalesce the vision thing as it’s been called in the past.

And it was in full disclosure, Jason, you put that idea in my head when we were doing our workshop in terms of, you know, this might be a good opportunity to do that and you turned me on to something that Arup, which is a very large international engineering firm, their founder had done back in the 70s. And I’m a word guy, I’m one of the few engineers maybe that enjoys writing and I appreciated sort of deconstructing Arup’s speech. And they’re a different company and they’ve got different things that they talked about, but the overall sentiment of how might I construct a defining statement for MSA that people could maybe go back to and revisit or we could use to share for perspective or new employees as to what this company is all about.

So it was really trying to pull together the last five years of change and put it into a vision that everybody could say, oh, I understand what you’ve been trying to do and I can get behind it.

Jason Mlicki: There’s so many layers to this speech that I love. One of the things that I really like about it was that when you described it to me, it was a bit of a different thing for you to deliver the way that you did. So, in terms of the way you’ve normally interacted as a leader, I think it was a big departure from maybe past times you’ve spoken to the whole firm in the Employee Appreciation Week. So just talk about that for a second because I thought that was really interesting.

Gil Hantzsch: I did a little bit of a throwback. I think everything I’ve ever done has been with a PowerPoint. We use the slides and you have your bullets up there. And consequently, I can just use the slides as my prompts for what I want to say. So those can be a little bit more extemporaneous. And then, I usually incorporate some cute graphics. I always try and bring in a little humor along with trying to make my business points. And in this case, I decided that I don’t want people reading the slides or looking at the screens. I want their full attention because I’m hoping what I say is going to be really important. I also wrote the entire speech out, which I’ve been trying to get away from because I think the delivery can be more stilted when you’re reading something as opposed to something that’s more conversational.

But going back to this idea that I read a lot, I enjoy writing and words are very important to me. And when I write, I can usually get the correct word and I’m always afraid that it’s not going to come out exactly the way I had phrased it in the writing. So I did write the entire thing out and I let people know right upfront, I’m not here to put on a comedy show, which sometimes I do. I’m going to be serious and I’m not going to put any slides up. So if you want to leave, you can leave right now.

Nobody left the room I was in. I have no idea how many people turned off the remote. And so then, you know, very early on in the talk, I think they could see that this was different than any other message that I’d given them before and that I was earnestly serious and as you said, putting myself really at risk as a leader because this thing could have been potentially received as a bunch of corporate BS. But I really wanted people to understand that I believe every word that I’m saying and I’m putting ounce of my being into this to the point where I think I told you when I was done, it was a 30 minute speech. I was emotionally exhausted. I was literally shaking when I was done because I didn’t know how it was received, but I just put myself out there.

Jason Mlicki: Well, I want to come back to how it was received towards the end. But as you know, I’ve loved the idea of the key speech from the first time I saw the idea of it from Ove Arup and the way that he had approached it 30, 40 years ago. So when you actually came back to me after a while, hey Jason, I just did this, I was so excited because I was like, oh, that is so cool. I can’t wait to read it and see what it’s all about.

So one of the things I want to do in this podcast is I actually want to talk about some of the contents of the key speech because I think there’s things in your speech that are really, really sharp. I think there’s a lot of firms that can learn from the way that you’ve framed a couple of concepts around how you see the firm.

So, I’ve picked out two or three that I just really liked, some of the analogies that you use. The one analogy that I really like a lot is how you describe the firm first as an ecosystem. So it’s sort of like, it’s a living thing and you compared it to a river and you talked about how drops of water enter and exit the river. And then you talk about how the firm is more of a community than anything. And so, I guess I just like to hear you talk a little bit about that. Like when you talk about MSA as a community or as an ecosystem, what do you mean by that and what does it mean for the people that come to work everyday I guess?

Gil Hantzsch: Sure. Full disclosure, you know, the river company is, it’s a blatant rip off from a really great book. It’s called the Living Company by Arie de Geus. And he brings that analogy in. And if anything, I’ve maybe extended it a little bit to the ecosystem. But he describes the river company, it sort of, it ebbs and it flows and it shrinks and it grows as needed and drops of water enter and leave as people do, but the river keeps going on. And so we all enter MSA. We all leave at some point. But if we do our job as stewards, the company will continue on. That’s our goal here.

So, you think about an ecosystem, there’s plants, there’s animals, the geography, the geology, nature, they’re all playing interdependent roles on what that river has to do to keep flowing. So I think that’s reasonable. When we think about our company from a systems view, we’ve got these internal support groups like HR and IT. We’ve got our external facing people getting the work and doing the work and then of course outside events in the world and the economy impact us and all of us together have to figure out how are we going to adapt to what’s going on so that we can keep chugging along.

So, I use that with our new employee orientation. I think it’s, people have used to use like a machinery piece of mechanical device to describe a company, right? You turn this lever and that happens. But when you think about it in terms of a living system or an organism unto itself, I think it really is a much more compelling vision as to the company. And then when we get into the community, I think that’s more of an attempt to describe how we interact with each other as people. And the counterpoint is oftentimes, people use or liken themselves in a company to a family. They’ve got a family atmosphere, we’re like a family. And I think as MSA was in its formative years, we probably did that too.

But five years ago, one of the first things we did is I started to be able to direct the company as we began creating these internal communities of practice, putting like practitioners from across the company together. And as we grow in size and we grow in diversity, all of a sudden, maybe family doesn’t work. We paid a lot of attention to interpersonal skills building. We do 360s, we do personality work. So I think our culture is becoming much more mature in terms of how people behave and how they react when the inevitable challenges arise.

So it was really gratifying to hear from our group of interns this summer, we did a little get together at the end of the summer, hey, how was your experience? And several of them started using the term community to describe their impressions of what it was like to work at MSA over the summer.

So I really took that metaphor and ran with it and really just tried to illustrate that building a great community might be harder and maybe more gratifying than being in a great family. I don’t mean to diminish the amount of work it takes to build a good family because I know that as well, but in communities, people have more choice as to whether they want to belong to that community. Whereas you don’t generally have that much choice with your family, you’re born into it and you make the best out of it and sometimes it’s awesome and sometimes it’s less than awesome. But hey, if we don’t have a great community, people will just leave.

Jason Mlicki: Yeah. I love the way you described that too. I think it’s really spot on too. It’s funny because shortly after you sent me the speech, I had done something inspired around the HubSpot culture code, which is similar with our staff and one of the five values that we pulled out of our agency that we talk about is we call it family matters and it’s just this idea that we try to create time and space for people to actually have families and have lives, which in the agency world is like, a lot of agencies just don’t behave that way.

Guiltily when I read your speech, I stepped back and went, oh man, maybe I missed the boat on that one. I totally blew it. I’m 30 years behind.

Jason Mlicki: The other section that I love is when you talk about growth because there’s a whole section, you actually break the speech up into four parts. So for the folks that may not ever get the chance to see this, you break it into four parts. You have a section about change, you have a section about the company, you have a section about culture.

Gil Hantzsch: We have our aims for the future and how we can get there and then a role as owners and putting, again, more meat around this idea of if I’m an owner, what are my rights but also what are my responsibilities.

Jason Mlicki: What I really liked about the section on growth was how you talked about the importance of growth. Why growth matters and what it does for the firm. But then you also talk about this idea of the firm remaining human scale and you made some comparisons in there. But talk about that because I love the phrase, we want to be a human scale firm. I just think that’s a really great way of looking at it.

Gil Hantzsch: So I think we wanted to first get it out on the table that people understand that growth is good and it’s not growth for growth’s sake. It’s not about rank, going up some ranking, but we wanted to articulate to people why growth is good and help them answer that question if they’re asked. But then I started thinking, if you extrapolate growth to the nth degree, it doesn’t maybe look like who we want to be. And if I go back to the natural world for one of my analogies, if you think of a tree, when a tree spends an awful lot of its life growing, but trees don’t grow forever, right? They stop at some point when they reach maturity and their optimal size, maybe like a human, they grow in girth and they’re not growing in height so much. They can’t keep growing taller forever because they would topple over, they couldn’t sustain themselves.

So, I think about the largest firms in our sector, there are over 100,000 employees. I can’t imagine for a minute what that must feel like. But I don’t think it’s possible in that size of a corporation to replicate the warmth and collegiality that a smaller firm can provide. And then if we just go beyond the feeling, if you look at the industry metrics, these are undeniable. The larger firms will have a lower profit margin. They suffer a much higher rate of turnover than the smaller firms. So there really is a sweet spot out there.
So I think there is an optimum size and that’s where it comes back to. Why is that the optimum size? Is it because people are comfortable knowing the people around them, they have an ability to trust those people. And to me, that’s where I think the optimum size is related to the humanness, the ability to relate to the people in the company and know that, no matter how many offices you are, you’re adhering to the same culture. Awful hard to say that when there’s 100,000 people. So this idea of being human scale as opposed to, you know, I think I probably used the death star, I always go back to that, but some vast impenetrable bureaucracy where you’re reduced to some kind of a number.

I think we have to acknowledge that there is an end point to growth. That’s going to be well beyond my tenure here and that’s for future generations to figure out. But I want them to bear that in mind. I don’t ever want them to fall into the got to keep growing forever trap because I think we’ve seen how that ends.

Jason Mlicki: It’s funny because I feel like Jeff and I talked about this in a podcast where we were talking about, I think it might’ve been with, I think he had suggested maybe McKenzie had gone through that. There’s a book called The Firm about their growth, where there had been this stretch where they grew faster and more than they originally anticipated and they thought they had lost some element of the culture and they had to regain and it was hard.

Gil Hantzsch: Sure.

Jason Mlicki: I guess the third part of this that I really love, that I wanted to hit on, that I just thought was really interesting was when you talk about change. And there’s a quote in here, I’m going to, I’m just going to read it, because this actually is probably my favorite quote in the whole speech. And basically you say, “If you don’t like change, you’re going to hate irrelevance.” I might actually have to steal that quote-

Gil Hantzsch: Well, you can’t because I stole it from somebody else. It’s a paraphrase. I think it really says, if you don’t like change, you’re going to like irrelevance even less. But it’s a US army general, Eric Shinseki who was credited with that, and I think it’s right on because what I’m trying to get at is, the future’s coming at us faster than ever, right? If you think about the rate of change that we’ve seen in the last five years, it’s the greatest we’ve ever seen in humankind’s history and it’s the slowest rate of change we’re ever going to see for the rest of our lives.

Engineers, maybe everybody, but engineers in particular seem fairly resistant to change, but you got to remember, that engineers and architects, we dwell in the safe and the conservative and the known because the public health, safety and welfare depends on us using tried and true methods. So buildings and bridges don’t collapse. But this idea that things will change, we’ve got to keep that in the dialogue because otherwise, people just get too set in their ways. We’ve got to keep people malleable and ready for this really uncertain future.

Jason Mlicki: You know what you did eloquently as well is you classified really two parts of change, that there’s change that is sort of thrust upon us and change that we choose, that we say, well, we’re going to pursue this change because we think it’s in the best interest. I mean, a great example of course are the communities of practice that you’ve built in the firm. That’s change by choice. I think it’s interesting to hear you talk about that. I mean, talk about the communities of practice a little bit and sort of that choice you made as a leader to actually bake that into the culture and what it’s done for the firm.

Gil Hantzsch: It was a choice.

Jason Mlicki: That’s a podcast in and of itself.

Gil Hantzsch: I’ll keep it short. But it was a choice and it wasn’t substantiated by any internal rate of return calculation. It was clearly one of those things that felt like absolutely the right thing to do on a number of accounts. There’s a cost, of course, it takes, what we do is we sell time in our business. So, if we get together in a room and talk about how to get better at their practice, there’s travel time and bar bills to be paid. So the results were really intangible, we just thought it was the right thing, it was of a leap of faith.
But a year or two down the line, all of a sudden, some tangible results started showing up. we win a large project because the client observed that our group had more passion and they had actual relationships with each other than the other interview teams, and then that project leads to another project which leads to another project. That wouldn’t have happened if not for the communities of practice.

And then the other example I would point to is in late 2016, we were having a discussion with one of our former employees. He had left us and he was maybe interested in coming back. But when we were talking to him, he pitched the idea of actually hiring not only him but his whole group of 12 people that he’d been working with. And that included people outside our traditional geography. So when we met with him and his principal, five years ago, all we could have said was, sure, we want the revenue that you would bring to us so come and join us. And that in and of itself would not been much of a pitch. But instead, we were able to tell the story of who we were becoming and how would their staff fit within our communities of practice and point to all the other things we’ve been doing to improve as a company. And all of a sudden, it makes a pretty compelling case.

So, they did all in fact join us and now we’re working to grow these locations in Atlanta and Dallas. Two really hot geographies that offer some diversification from our upper midwest geography. None of that would’ve happened I believe had we not made that leap of faith to create the communities of practice.

Jason Mlicki: That’s an interesting story. I didn’t know that’s how that actually came to be. You know what I like, there’s another phrase in there that I’m going to quote because I liked it as well. This was in relationship I think to the communities of practice. You said, “We could have chosen not to do those things, but that would have been a choice not to become an exceptional firm.” In a way, that one phrase sort of encapsulates so much of what you’re trying to say in the speech is that the choices we make have a direct impact on what’s going to happen.

The communities of practice. I mean, the decision you made, and I liked the way you described it right now, you were making a future value decision. You were saying, you know, like you said, the internal rate of return doesn’t show up right now, but I know it’s the right thing to do and I know that I’ll be rewarded in spades down the line. I just don’t know how.

Gil Hantzsch: Right. And that’s the thing where we’ve got to get people’s trust in that that decision is going to pan out because again, smaller firms, it’s very common and we were like this at one time. If you’re just highly operationally efficient, you can keep your head down and just focus on making money and the money that you get, you divide up and pay out as bonuses to avoid paying taxes. That’s a simple version on how a firm would run. The problem is, you’re not investing in the future of that company and that’s the type of company that ultimately ends up getting sold.

So what we had to do is start to decouple and say success is not necessarily measured by how big a bonus you’re going to get. In fact, we’re far better off if we don’t give you as big a bonus and we reinvest that in the company, either through some type of initiative or even if we’re talking now about some type of acquisitions, the money that just gets paid out doesn’t really help grow the company. It allows people to stimulate the economy, but it doesn’t really help the company along. So we’re in this pivot point again of the way we used to manage the firm and the way we now can manage the firm, especially now that we’re an S corp, an S corp owned by an ESOP doesn’t pay taxes.

So, we’ve got some tax free income that gets freed up. It helps us with the ownership transition, but it gives us the opportunity to make investments in the company, which although it might decrease your bonus today, it should improve the value of your ownership stake in the company. The biggest challenge I think that we and other ESOP firms face is especially with a lot of younger folks joining the workforce is retirement’s a long ways away. In fact, it’s an abstraction and people don’t care. It just is so far out in the future as to maybe not have much value to them as opposed to, hey, write me a check right now and we’re good.

But so, that’s again, up to us to continue to stay on message as to why that’s a good thing, you know? I mean, what do we hear all the time? People are under-investing for their retirements. So by maybe being a little bit more top down and saying, we’re going to do things that instead of producing cash for you today are going to produce cash for you upon your retirement, you might not appreciate it today, but hopefully some day you’ll thank us for that.

Jason Mlicki: You’ll appreciate it in the future. Yeah. You gave us another great pivot point, I’ll call it in there. So, let’s pivot back out of the speech and let’s just talk about, and sort of the last comments before we wrap, how it was received. You alluded to this early on. You put yourself out there as a leader. You were a little bit vulnerable in the moment, right? Saying I’m going to do something differently than I’ve ever done it and I have a reason for doing that. What has the reception been like?

Gil Hantzsch: It’s been good. You know, again, it was pretty quiet. I had a few people say, wow, that was really something. I had one gentleman who is a survey tech, the email he sent me, the subject line was exclamation mark. He went on to just say how jazzed up he was. But I asked my leadership team at the meeting following that, I mean, I just did this, I don’t know how it was thought of, can anybody give me any feedback as to whether people were buying into this. One of the guys spoke up, he said, “Well, I’ll tell yeah. We were interviewing a perspective employee and he was asking all kinds of questions about the company and we just sent him your speech.”

I started to laugh because I’m not sure if he ended up joining us or not, but I guess they felt, well, okay, that tells me that it was coherent enough for them to want to pass it on and think it would answer somebody’s questions about who we are and where we’re going. So, we’re going to work, and our marketing folks are thinking about maybe making me redo it in a manner where they could cut it up or maybe improve on the audio quality a little bit. I think it probably, maybe not as in it’s entirety, but there are probably some things in there that would be good to include as part of our onboarding. I just think it helps take away some of the mystery, and the sooner people figure out, you know, this is what we’re about, you know, and hopefully it’ll help us self-select the right people.

Not everybody is cut out or maybe wants to be in an employee-owned company. Maybe they want to be able to own the whole company, which you can’t do, or maybe they don’t want the responsibilities of ownership. So, I think the more we can use these in our recruiting messages and say this is what we’re about, and if you’re that kind of person, you should join us. And if these things don’t appeal to you, no harm, no foul, but we’re probably not the right company for you and we can save ourselves both a lot of heartache.

Jason Mlicki: Yeah. I can’t think of a better reception to get from a speech and than one of your leaders saying that to you because that’s really what it’s all about. And you know, Jeff and I just did a podcast discussion around this notion of a legacy firm, and what it strikes me is that’s really what this is about. It’s about defining the legacy for the firm and looking out at the time horizon out in front of you, even beyond your stay as leader. So where this firm is going to end up. I guess I just have to commend you for having the courage to stand up and do that.

Gil Hantzsch: I appreciate that and I appreciate the inspiration. It was a good fit. I just sometimes need a little nudge but fortunately, I enjoy that kind of stuff and I’m hoping that it does become for a while, as long as it serves some purpose, another brick in the wall of our culture and helps define who we are and how we’re different from all or most of the other firms out there.

Jason Mlicki: From the borg. So, I want to thank you, I’m going to thank you on behalf of all MSA-ers out there for articulating and coining the speech. And then I’m going to thank you to all of our podcast listeners for sharing both the story of the speech and some of the insights inside of it because it was really, really inspirational and I enjoyed it, enjoyed to have the conversation. So, thanks for joining me.

Gil Hantzsch: Thank you. This was fun and I appreciate it, Jason.

Jason Mlicki: Cool. See you, Gil.