Succession and Exit Planning - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Luke McCormack of McCormack Partners and past NRCA CEO and US Congressman, Reid Ribble. You can read the interview below, listen to the podcast or watch the full episode.

Heidi J. Ellsworth: Hello, this is Heidi Ellsworth and we are live with Roofing Road Trips here in Arlington, Texas at the National Roofing Partners Annual Conference for their leadership, the Leadership Summit. And I am so honored today to be with Reid Ribble and Luke McCormack. Hello gentlemen.

Reid Ribble: Good morning.

Luke McCormack: Good morning, Heidi. Thank you for having us.

Heidi J. Ellsworth: Oh my gosh, how great is this?

Reid Ribble: It's fun.

Heidi J. Ellsworth: It's live. I usually am on the other side of a screen from both of you, and this is in person. We had a great time last night, that whole Leadership Summit kicked off last night. Both of these gentlemen are speaking today as I am also moderating a panel. So we thought, let's take a moment, do a Roofing Road Trip and talk about something that we're all worried about and that is labor and what's going on with labor. Let's start with some introductions. I know you probably don't need to introduce yourself, but if you could, that would be great.

Reid Ribble: My name is Reid Ribble. I'm now retired, but I'm the former CEO of the National Roofing Contractors Association.

Heidi J. Ellsworth: Awesome. And?

Reid Ribble: And?

Heidi J. Ellsworth: You used to have another job.

Reid Ribble: Oh yeah, before that I was in the US House of Representatives for six years, and before that I was a roofing contractor for 35 years.

Heidi J. Ellsworth: I was talking about the roofing contractor. Luke, can you introduce yourself?

Luke McCormack: Yeah, certainly. Obviously not on the level of this man, but so my name is Luke McCormack. I am the CEO of McCormack Partners. We are a roofing recruitment firm. We've been recruiting in the roofing industry from managerial to executive level for the last decade. And over the last few years, I've moved my business from the UK to America and very grateful to be here with you great people. Looking forward to my first ever international speaking event today at the NRP Leaders Summit. So no pressure. No pressure next to guys like Reid and Heidi and Jason Harris, but grateful to be thrown in the deep end and look forward to seeing what happens.

Heidi J. Ellsworth: I am so grateful for you because this Live Roofing Road Trips is actually being sponsored by McCormack Partners.

Luke McCormack: Oh, great.

Heidi J. Ellsworth: And so that is, it's so important as a community that we come together.

Luke McCormack: 100%.

Heidi J. Ellsworth: And really constantly are putting out this information and making it happen. And we are live on LinkedIn, so if you're watching this live either on YouTube or LinkedIn, welcome, thank you so much and be sure to make some comments. Megan Ellsworth, our producer is in the back end and she's going to be commenting and chatting back there. Let's get started. First thing, where are we? I mean, Reid, I have been listening to you talk about the labor shortage now, I want to say not quite 10 years, but you were at the forefront of it. You saw what was happening, obviously as a roofing contractor and then being in Congress. From where we were when we first started raising the awareness of that we have this major labor shortage going on. Where are we today?

Reid Ribble: Well, first of all, the good news is we're in way better shape than we were a decade ago.

Heidi J. Ellsworth: Yes.

Reid Ribble: And it's by a mile. I think when we talk about labor in general in the roofing industry, we have to be more inclusive about what we mean. I look at labor more holistically. Every roofing needs accountants, they need salespeople, they need administrators.

Heidi J. Ellsworth: Yes.

Reid Ribble: They need project managers, they need general laborers and roofing workers. As we look at the broad landscape on labor, things have improved in part because of a lot of initiatives that the Roofing Alliance has done along with NRCA to focus our attention across the entire spectrum of labor requirements in the roofing industry. It's getting better.

Heidi J. Ellsworth: When we look a decade ago, contractors, people, they were kind of working together, but not to the extent today is, to your point, it is a real focus. So not only have people become aware, but they’ve also started collaborating and they've really started making some strides.

Reid Ribble: For sure. This has been a very strategic process along the way that was actually started by my predecessor Bill Good at NRCA. I built on the foundation that he put there. And now McKay Daniels is building on the building blocks.

Heidi J. Ellsworth: Yes.

Reid Ribble: That we put in place. And it does take an entire industry, our industry partners in the roofing industry, companies like McCormack and others that are in the recruiting side of the business, along with the foundation that has sponsored the student competitions and whatnot-

Heidi J. Ellsworth: Yes.

Reid Ribble: In construction management. And so there's just been a lot going on.

Heidi J. Ellsworth: A lot. And so Luke, I'm really interested, and you've had such great insight. I mean, coming internationally, coming from where your company started in Scotland, but now you are a US-based company out of Dallas, Texas right here.

Luke McCormack: Yeah.

Heidi J. Ellsworth: What do you see coming into the US market? And really, you've been doing some amazing recruiting and helping contractors. What are you seeing with the current labor shortage?

Luke McCormack: Yeah, certainly. To echo what we'd said, people speak about the skill shortage, the generation gap, the labor shortage and the focus is always on the roofers themselves. But it's not just that and where we recruit and where we see a big shortage, it is the project managers, the estimators, the sales guys and these people are in a real shortage and I don't think that gets the airtime that it deserves. I think what I've seen globally is that there's a skill shortage, there's a generation gap and the biggest issue that I've seen as to why this is the image of the industry, these outdated perceptions that the industry is dirty, outdated, dead end, no career prospects, no money to get made.

Having worked in the industry for as long as we have, we know that that is not the case. And when you look at this problem and then you think, well, who should come with the solution? A lot of people want government to solve all the problems. They'll be waiting a while for that. So do you look to government? Do you look to associations? Do you look to manufacturers, contractors, service providers? The answer is that it's everyone's problem. We all benefit from this industry, and we all have the responsibility to do something to better the industry.

Since coming to the other side of the pond, it's been quite breathtaking how collaborative the industry has and from all angles. From RoofersCoffeeShop, from the NRC, from the Alliance, from the manufacturers, from the contractors, so many people giving up their time, their money, their energy and their ideas to help us overcome this image problem and overcome the labor shortage. I think 10 years ago when someone was hiring, they were in a very good position that just because they had a job, they would have four or five people lining up to work for them. Whereas now, there's been a massive paradigm shift and when there's one good project manager or estimator or salesperson on the market, there's about four or five different companies competing for that person. So for me, the labor shortage today, the companies that will not survive through this.

Heidi J. Ellsworth: Yeah.

Luke McCormack: Are the ones that are still archaic and their recruitment processes and their investment into actually looking at recruitment is the issue of what it is. Any big problems on site, these guys are, they're smart enough, they're strategic enough that they would deal with the problems. If they didn't have enough money coming in, they would handle that. My message to a lot of roofing business owners is take the recruitment problems seriously and focus on your image, your brand, your onboarding, your training, your upskilling. And by doing that, you will be able to overcome the shortage and possibly even rewind time and put yourself in a position where there is four or five people competing to work for you.

Heidi J. Ellsworth: Great.

Luke McCormack: So yeah, that's what I see.

Heidi J. Ellsworth: That would be great.

Luke McCormack: Yeah.

Heidi J. Ellsworth: Yeah, that would be great. And getting people from outside the industry to come into the industry to realize how great it is. I think you're a recent member, just joined the Roofing Alliance.

Luke McCormack: Yes.

Heidi J. Ellsworth: RoofersCoffeeShop joined the Roofing Alliance, so we were very excited about that. But I think those kind of initiatives of what we're seeing coming together with, like you said, SkillsUSA, the training and what the NRCA has done with certification and the track training program, that's making a huge difference.

Reid Ribble: It is. I mean, we're talking thousands of people now have gone through track trackers, training for roof application careers for that new entry employee and all of these things that lead up to professional certification for roofing workers, for the person that's actually delivering the roof. These are the types of things that cause a worker to respect themselves and I can't overstate how important that is. We cannot expect people to respect what we do until we respect what we do and that means we have to invest.

Heidi J. Ellsworth: Right.

Reid Ribble: And a typical roofing worker generates $50,000 a year in gross profit for a roofing company, and that's repeated every single year for as long as you can retain that employee. So to spend $20,000 or $25,000 up front to get that worker to be highly skilled is a huge investment. If I said to you, Luke, if you give me $25,000 today, every year I'm going to give you 50,000 for the next 20 years, is that a deal you take?

Luke McCormack: Take my money.

Reid Ribble: Take the money. But yet we have to convince roofing contractors to not take a narrow view.

Heidi J. Ellsworth: Right.

Reid Ribble: But to take a long view, and that then plays into this whole role of retention. And the keys there, in my opinion, are two, respect and gratitude. You must respect your workers, and you must be thankful for what they do and that has to be expressed.

Heidi J. Ellsworth: It does. Every study that comes out on and I think that's true no matter what age you are.

Reid Ribble: I agree.

Heidi J. Ellsworth: No matter what. But when you look at this younger generation coming in, they are about mentoring, they're about respect, they're about gratitude, about really. And so, as an industry, we have to step up to that and make the inclusiveness happen.

Reid Ribble: These are human values.

Heidi J. Ellsworth: Yes, I know, it's not that, and it is really about culture. Luke, you have talked about culture so much in different things. How important is that for the retention of the employees?

Luke McCormack: That's a great question, Heidi. I've been doing this for about 10 years, and my recruiters are calling hundreds of candidates every week in roofing firms. And when we call them, 75% of candidates don't take our calls. But from the ones who do take our calls and we ask them, "Why are you speaking to us? Why are you considering leaving your firm?" What I've came to realize is that it's almost never a financial decision, and it's always an emotional decision. One of the main reasons as to why people leave is because of culture. They don't feel part of the family, part of the mission. And a lot of the times that is because the business owner themselves hasn't actually assessed what their culture is and they haven't assessed cultural fit in the hiring process.

And for me, myself, I used to hire people just because they had three, four years recruitment experience, you'll do, you in. I realized how destructive that can be to having a company that flows well. It's when I started focusing on the personality types of the people in my business and then interviewing them to find out what are their hobbies, what are their values, what do they like doing outside the work? What personality type are they? And then in our hiring process, we'll get people to do personality tests to see if they're going to clash and if they're going to mesh with the rest of the team. And for one reason or another, all my staff, they're all the protagonist personality type. I know that they work well with each other. I know how to manage them, how to lead them and culture's such a big thing. And if you don't define your culture, your culture will define you.

When I am asking business owners about their culture, they don't always necessarily have it on their website, but if they do, it might just be a generic statement. So I like to ask them, give me examples of personal development from within your business. Professional development, what do you guys do together as a business? What do you do for the community? What is your mission? What is your brand values? And when a company has got all of that hashed out, it puts them in a prime position to have clarity in who they are, the type of people that fit in well with them and these are the companies that retain their employees more and grow faster than others. So yeah, I think culture is everything. It's such a buzzword that not too many people truly understand it.

Heidi J. Ellsworth: Right.

Luke McCormack: I think culture is everything, and you should assess your culture, you should implement it into your hiring process and from that, you'll see a happier workforce and a more successful business.

Heidi J. Ellsworth: Yeah.

Reid Ribble: I want to just add one thing, because I think what you just said, Luke, is really important. A lot of times when I hired somebody for what they knew, six months later, I fired them for who they were.

Luke McCormack: Yes.

Heidi J. Ellsworth: So true.

Reid Ribble: And this idea of the personality type fitting into a company, if you hire somebody who's just a jerk, but they're really good at their job, all you've done is move that jerk 30 feet down the hall and that's not typically good for the company or for the culture.

Luke McCormack: 100%, and sometimes when a roofing business owner is hiring, they could see a resume and it's this guy, he's been in the industry for 20 years, he's worked at all the main companies, he knows your market, he knows your products. And so when you look at this candidate, you've got the rose-tinted specks on, and you miss all the red flags because you just think, oh, this is this guy. You hire him, three months later, he's left, path of destruction. And you're shaking your head as to why did this happen?

Heidi J. Ellsworth: Yeah, path of destruction.

Luke McCormack: The reason why is because you didn't assess cultural fit. So yeah, it's such a big thing that a lot of companies overlook, but more companies that I'm working with these days, they'll put someone through 16 Personalities or a disk assessment and they'll make sure that they are the right person.

Heidi J. Ellsworth: To go through.

Luke McCormack: Because like Reid says, we will hire people based on their skills and experience, and we fire them based on their personality and their attitude.

Heidi J. Ellsworth: Right.

Reid Ribble: That's right.

Heidi J. Ellsworth: We are actually getting ready to do one of those communication studies for our team at RoofersCoffeeShop.

Luke McCormack: Really? Wow.

Heidi J. Ellsworth: Yes, and it's all about how each of our crew members are going to communicate and with each other, understand each other. There's just so much to do that. But that used to be that, oh, that's too touchy-feely for us, we're just tough construction people. But that's changed, and I think the culture has always been there. I mean, I know with my dad looking back in construction stuff, there's just this beautiful generational culture within construction, within roofing, but now people are going, okay, we can talk about it maybe a little bit more.

Reid Ribble: I think that's normal with generational shifts that are occurring. And as these generational shifts happen within a company, I'm a boomer, you've got to be willing to accept the fact that a 20-year-old does not think and view the world the way I do.

Heidi J. Ellsworth: Exactly. Totally different.

Reid Ribble: And therefore, it's up to the company then to adapt to this new generational worker without regard to where they're going to fit into your company, you've got to be aware of what hits their hot buttons and also how to get them to gel in the community of your office.

Heidi J. Ellsworth: Yes.

Reid Ribble: That matters.

Heidi J. Ellsworth: And make them feel respected.

Luke McCormack: Yeah, 100%. And that's such a big issue because, so you're a baby boomer Reid. In 2029, the youngest baby boomer will be 65. Baby boomers are reflective of 49.2% of an American roofing contract and business owners, and a lot of these business owners, they are competing for the younger generation, for the young estimators, project managers, the up-and-coming people that they can develop, they can mentor and they can bring through to the next level, but time is ticking. There's a lot of these older, experienced people that are leaving the industry and we can't get the new blood in without the older guys and the older ladies who can actually mentor them and develop them and bring them up. So it is something that people need to act on now before they lose the opportunity to do so. I wouldn't like to think where the industry would be if the people that have built this industry retire and then we've got all these new people with no one to train or develop them. It's a ticking time bomb, I think.

Heidi J. Ellsworth: One of the things that I've been seeing through the studies with the Gen Zs and the next generation is there a little bit, it seemed like when the millennial and I'm not putting any, saying this set because everybody's their own person and it's not there, but we're moving a lot more. The Millennials were moving jobs a lot more where now some of the studies are showing Gen Z's coming in, they want to find that place. They want to find, they're buying homes earlier, they're staying longer. It's another shift in these generations, which I find really interesting, but they also will leave if they're not happy.

Reid Ribble: They're moving, but they're not moving geographically. They're changing companies within a geography in the US. In fact, mobility is down.

Heidi J. Ellsworth: It's down.

Reid Ribble: And it's way down. And the reason being is unlike family that I grew up in and my own family where I was a single provider for the family's income, we now have dual income families. And so if one spouse gets the opportunity to move to a different state, the other spouse can't find a job. They're kind of locked in, and we're seeing that mobility is dropping off. The one place where mobility is still high is with the immigrant community. They're very mobile because by the very nature of their journey here to the US to come here, to immigrate here, mobility was part of that and so there's a lot of dynamics that are underneath it, and it's much more nuanced than what we might think.

Heidi J. Ellsworth: It is. I find it fascinating. And as we're looking at retention, I think that's really important, not only for culture, but to understand what's important to people who are working for you. Time with their family. What are the things that are important, ability to go visit home if you're an immigrant.

Reid Ribble: And most people, like Luke mentioned, do not leave a company because of bad pay. They leave a company because of bad bosses and bad culture.

Luke McCormack: Yeah, exactly. Or been forced to choose between their family and their work due to mobility and having to travel.

Heidi J. Ellsworth: Well, and you told me Luke one time, and I really held onto this, that a lot of times when people are changing jobs, it's because of huge life changes for them.

Luke McCormack: Yeah.

Heidi J. Ellsworth: A new baby.

Luke McCormack: 100%.

Heidi J. Ellsworth: Marriage, yeah.

Luke McCormack: Yeah. I mean, it's such a common thing that a lot of people overlook, and it's inevitable for most people that a baby's going to come into the world. You guys can tell me when the birth of the first child came, did that make you reassess everything, your job, your career, where you're going to live, what you want to do. If one of your employees is going through a situation like this, it could be a new baby, could be the death of a family member, it could be the kids have moved out the house and now they've got some freedom. But these things do make people reassess. And how you respond as an employer, it says everything. If you've got a member of staff and their wife has fell pregnant and you send a basket for new mothers and a basket just for the kids, the loyalty that you'll gain from doing that is something that's hard to measure.

In the US military, they have a quote and it's, "Recruit the soldier, retain the family." And it's so important for companies to be in touch with the family life and the personal lives of their employees and show them that they're not just a number and you actually care. Because when someone is changing jobs, it's an emotional decision, so when they're in that temporary emotional state, they've maybe a few bad weeks at work, the commute's been bad, they've had problems with their boss. When they're in that temporary emotional state to consider a career move, the family will then act as the shock absorber.

And they'll be like, "Well, think of all the small things this company have done for us. Do we know the next company will treat us the same?" And whenever someone's given a job offer, 99% of the time, they always say, I need to speak to the partner. So it just goes to show that it's not just the employee who decides if they'll join your company or if they'll leave, it's usually always the partner as well.

Heidi J. Ellsworth: Oh, yeah.

Luke McCormack: I think taking that into consideration and living by the US military quote, recruit the soldier, retain the family, I think that can only stand you in good stead.

Reid Ribble: I also think that younger people that are more in tune to safety.

Heidi J. Ellsworth: Yes.

Reid Ribble: And so, if your company has a culture of safety, it makes it so much easier to recruit because that spouse who's worried about the other one coming home, at the end of the day, they're much more inclined to say, yeah, go ahead and take this job, this company's got a great safety record. And that means it translates to caring about you.

Heidi J. Ellsworth: Right.

Luke McCormack: Yeah, 100%.

Heidi J. Ellsworth: And talking about that, as a roofing company and this is one of the things that I wanted to talk about too, on strategies for recruiting, but talking about your safety record, talking about your culture putting out there. So Luke, I mean, you are helping contractors all over. What is some of your advice for contractors out there and companies in working with recruiters like your company and also being constantly in that mode of recruitment?

Luke McCormack: Yeah, always be hiring.

Heidi J. Ellsworth: Yeah.

Luke McCormack: That is my quote. I think there's so many opportunities out there to get good members of staff and onboard them to the company where your revenue will grow, your company will grow, that you need to always be in a position to do that. I'll tell you all my reasons as to the strategies and tactics that I've used to grow roofing businesses, but obviously I'm biased. I'd like to put this question to Reid because Reid, you've grown a very successful group of companies and when I interviewed you a few months ago, I'd asked you about using recruiters. Obviously my advice is use a recruitment firm to grow your roofing business. But from someone like yourself, Reid, who's grown through the industry, sold your business, been very successful, what would your advice be to roofing business owners in terms of using recruitment firms and the effect of that?

Reid Ribble: Well, I think in one, it depends on what position you're looking to hire and how much you're willing to invest. But I would say that the use of recruitment firms is that first clearinghouse, because part of your job as a recruiting firm is to make sure that these employees are properly vetted for the culture of the company you're working for and not every roofing company owner or HR person has the experience and set to properly evaluate, like when you mentioned before, the personality traits of an individual. Sure, you can look at a resume and see their skill set, but having that experience to go through and really understand and how to vet and partner or match, I guess that's a better word, match the right candidate with the right company, that comes from experience.

Luke McCormack: Yeah, 100%. And the way that we do it, so when I have a call with a client, the first thing that I want to do is differentiate this roofing firm from the others in the way that I've done it with my firm, and I know you're a big advocate of this, Heidi, it's to create a story brand.

Heidi J. Ellsworth: Yes.

Luke McCormack: So, when I'm speaking with the business owner, I want to go all the way back to when the business was established and what are the milestones and who are the main people that got you to where you are today? What is the vision for the future? Where can this new hire make an impact? What is the culture like? What is the managerial style like? What is the key personalities and characteristics that people that usually go into this role last long at the company? And once we've got the story brand, it gives us an elevator pitch. So when we then call on candidates, we are not calling on candidates that move around every two years, they're always in the job boards. It's genuine headhunting.

We'll call someone out the blue and we'll say, "Listen, this isn't just your typical project manager job in Dallas. This is a special company. This is their story. This is their values. This is the culture, this is the people." And by doing that, it gets a much larger candidate pool than what you could get doing it yourself. When we are then screening the candidates, it's not just about how many years have you worked with built up roofing or standing seam or how long have you been in re-roofing? Or how long have you worked in projects? At this scale, we've got tactics and strategies to understand the true emotional drivers of the candidates and actually assess if they will be a cultural fit or not.

Heidi J. Ellsworth: Yeah.

Luke McCormack: So, it's a full-time job. And for companies that try to do it themselves, they're limiting their candidate pool to this size. Whereas when you use a recruitment firm, it really makes it massive. And for us, being aligned with the NRCA, with Roofing Alliance and being active in the market, our reputation is everything. So when someone gives us a project, it's not as if we are doing a project for them, it's our project as well, it's our reputation as well.

My business has been built upon repeat business, and we're not trying to get a quick fee. We're trying to build a long-term relationship with these companies, help them look at recruitment from a different perspective and ultimately team them up with the best candidates in the market, with the best employers in the market. I'm very proud to say that we've helped companies double, triple, quadruple in size. There's a lot of business owners who are baby boomers and perhaps didn't have their second tier management system in place, so we've been able to build that for them, help them build out their estimate departments or their service departments or their sales departments. And we've had a lot of fun while doing it as well.

Heidi J. Ellsworth: I love what you just said there too, is really thinking about your succession plan. That's what you're speaking about today and you've been speaking about a lot across the board, but it's not just about what do you need right now? It's what do you need for the future? I think this is really thinking about how are you branding your company, how you're involved in the industry, I love that. I just think it makes such a difference. When I look at the contractors who are on RoofersCoffeeShop with the directory, people can come and look and see what are they about, what is happening and to get someone with your kind of talent and your team's talent to be able to really bring that in. So gentlemen, this has been so much fun. This has been really great.

Luke McCormack: Appreciate, Heidi.

Reid Ribble: It's been good.

Heidi J. Ellsworth: Oh my gosh, this has been so good. So I hope LinkedIn Live, hopefully you've been chatting with Megan, but we'll also be, I know these two gentlemen. Also, follow Reid on Twitter. Your Twitter handle is?

Reid Ribble: RepRibble. @RepRibble.

Heidi J. Ellsworth: There you go. And I tell you what, it's fun to watch. See what's going on, on many levels.

Reid Ribble: A little controversial, but.

Heidi J. Ellsworth: Yeah.

Reid Ribble: Yeah, sure.

Heidi J. Ellsworth: And were you LinkedIn, what's yours?

Luke McCormack: LinkedIn for me, Luke McCormack, McCormack Partners Roofing Recruitment.

Heidi J. Ellsworth: And as you know, Heidi Ellsworth, RoofersCoffeeShop. You can find us on LinkedIn, on Instagram, on Facebook, everything but we love being on LinkedIn today and we love being live. Thank you both so much for being here today.

Luke McCormack: Thank you, Heidi, I appreciate it.

Heidi J. Ellsworth: Thank you.

Reid Ribble: Thanks, Heidi. Good to be with you.

Luke McCormack: Thank you.

Heidi J. Ellsworth: And thank you. Thank you everyone for listening today and being part of this, please check out the McCormack Partners directory on RoofersCoffeeShop. You can get all the information there, and you can start your own recruiting initiative. Hopefully this helps, and we will be bringing more of this Live Roofing Road Trips to you as we move forward. Be sure to subscribe on YouTube, ring that bell and on your favorite podcast channel. Subscribe and set your notifications so you don't miss a single episode. We'll see you next time on Roofing Road Trips.

Luke McCormack: Thank you, guys.