Culture Leads to Strategic Expansion and Enhanced Customer Relationships

In 1995, for the first time in its 100-year history, 2010 Baldrige Award recipient Freese and Nichols, Inc. posted a negative profit—-1.7 percent—and its morale was trending in the wrong direction.

In 1996, the engineering and architectural firm's CEO, who sat on the board of a local hospital, learned about how the hospital was using the Baldrige Criteria for Performance Excellence to improve its performance and thus embracing continuous improvement (CI). In the Baldrige spirit of sharing best practices, the CEO brought the Baldrige Criteria home to his own company, and the firm quickly regained profitability and more.

That history is outlined in the recent article "Human Side: Create a Culture of Continuous Improvement" in Municipal Sewer & Water, a monthly magazine for the sanitary and water maintenance industry.

"We didn’t start out to win a Baldrige Award,” explains Robert Pence, P.E., BCEE, Freese and Nichols’ current President and CEO, who is also on the Baldrige Program Board of Overseers. “We just wanted to implement a continuous improvement management system that would measure the things we do. . . . When we found gaps between our goals and how we really were doing, CI showed us how to do root-cause analysis and take action to fix things, then go back and measure them to make sure they’re fixed.”

According to the article, results have been impressive:

• The firm regained profitability in 1996.
• Bookings in 2014 hit more than $96 million, compared to $20 million in 1995.
• Employee turnover over the past 10 years has averaged less than half the industry’s national average (6 or 7 percent compared to up to 16 percent).
• The percentage of new employees who stay for two years stands at around 88 percent.
• In the last 15 years, client satisfaction increased to 4.73 from 4.4.
  

  Overall Client Satisfaction Survey Results 2002-2013

   

“A review of financial results during the 1970s and 1980s revealed that Freese and Nichols did well when the economy fared well and poor when it was poor,” writes the article’s author. “But ever since the company embarked on its CI journey, it performs solidly no matter how the economy performs.”

And that solid performance and CI culture continues today, leading to a strategic expansion to North Carolina and enhanced customer relationships, especially with municipal clients.

According to Mike Wayts, P.E., CFM, North Carolina Division Manager, and Cindy Milrany, Chief Financial Officer, maintaining the firm’s culture—which helped it win a Baldrige Award—during the expansion is very important and part of the firm's strategy and grass-roots efforts.

Strategic planning and ensuring that the workforce always has growth opportunities are important to Freese and Nichols, said Milrany; “You can’t provide everything for your employees if you are not giving them what they need for growth. A new office like North Carolina provided a great opportunity.”

Wayts added, “If we’re not growing as a whole company then we’re not supplying growth potential.”

The geographic expansion has helped to offer new opportunities. Freese and Nichols has already begun the process of partnering with universities, including offering monetary support through scholarships and recruiting fairs, and supporting the local community through board support and donations to the YMCA, for example.

Wayts said what was particularly important to the firm was bringing its CI culture to North Carolina. “Some of the core things that make the company who we are and helped us win Baldrige, we’re making sure we apply in North Carolina,” he said, citing its customer service hedgehog concept, sales system, and focus on employee satisfaction as setting it apart from competitors.

Among offices, the processes and technical excellence program are the same, he said, so that new employees and long-time employees experience the same culture and can work together seamlessly across offices.

Milrany added, “We do a great job of deploying consistent processes across corporate functions and technical disciplines.” In fact, she said Freese and Nichols conducts a culture analysis every three years; “It’s almost scary how consistent our culture is across offices.”

Municipal clients also continue to be a growth area for the firm, which is offering services in North Carolina related to water and waste-water utilities, water resources, storm water, program management, and construction services.

“We really had no idea how [receiving the Baldrige Award] would open a different kind of relationship with some of our clients,” said Milrany. “We were very engaged with helping the city of Irving receive the Baldrige Award,” as well as other cities on a Baldrige journey of improvement.

Milrany said Freese and Nichols uses an integrated sales system with gold sheets for its clients: level 1 of the system means providing commodity services, up to level 5 of the  system that directs the firm to help the client improve its own organization.

“Baldrige helps us to have that level-5 relationship with a lot of our clients,” she said. “Not all of them would tell you they are on the Baldrige journey, but a lot of them would tell you we believe in CI or performance excellence, and they’ve been able to use the Criteria to enhance that journey that they’re on.”