April 14, 2022
TPL Insights: Building Peak-Performance Cultures #114- How Bill Higgs Built a Culture of Peak Performance at Mustang Engineering Part 3
With paraphrased content from Bill Higgs’ book Culture Code Champions
This week, we continue our examination of Bill Higgs’ success in building a peak performance culture using a key TPL principle, Disciplined Human Capital Practices.
The job on the corner of the desk, which Bill speaks of often, also meant that there wasn’t as much downtime in Mustang’s overhead costs. This led to increased profitability within the standard billing rates for the oil industry. This efficiency was where Bill was able to squeeze out bonus money for everyone who was working so hard. In short, the job on the corner of the desk approach to work forced a sales discipline and a completion discipline. Sales had to close, and projects had to close. Everyone was accountable and rowing in the same direction.
Acquiring the Human Capital without Acquiring the Company
A unique approach Mustang developed allowed them to acquire entire companies of “A” players without acquiring the companies themselves. These were called “no-cost acquisitions.” Instead of buying a company and working to trim out the “corporate fat” while fighting the inertia of the acquired business, they left the fat behind. Distressed companies, or parts of companies, or key-management team members were identified and then offered a solution. Mustang was able to put their people to work on their projects, while the overhead people closed their business units or moved into other areas of the company. That’s what Bill refers to as leaving the fat behind.
Another strategy was to hire full management teams from other companies and let them bring in people or teams from their previous employers or contacts. This way, they redeveloped their capability under a much leaner and more responsive leadership team at Mustang. During their first year in business, Dave Rucker merged his engineering firm into Mustang, and that “merger” brought the company good technical computer programs and raised their profile with industry leaders who had profound respect for Dave. They helped spread the word that he was now with Mustang. A few years later, Bill did it again. He acquired most of Wilcrest Engineering at no cost. Mustang received a call from Benton Oil & Gas managers asking if they could pick up the engineering team they had been working with at Wilcrest. Wilcrest was suffering in a downturn, people were leaving the team, and this was negatively impacting their project. This was Operation Horsethief on steroids: the entire team that worked at Wilcrest was moved to Mustang without buying their company! Essentially, Mustang just picked up their payroll and the project.
This happened again in the eighth year. A company called Litwin had recently been acquired by Raytheon Engineers & Constructors. Bill wasn’t familiar with Litwin, but an executive recruiter he respected called and told him about the company. Litwin had been a very stable company: many of its engineers and support staff had worked there for fifteen to thirty years—which was impressive and a lot like Mustang. It had a good people-oriented culture that would match well. Moreover, Litwin had expertise in refinery and petrochemical, an area Mustang wanted to get into for diversification. So, Mustang hired the leadership team when their contracts expired and, over the next fifteen months, continued to cherry-pick the company’s best 300 engineers and support people. Another example of acquiring the human capital without the baggage.
Great Companies Attract Great People
One of the best benefits of building a people-oriented company with a strong team culture is that eventually, you don’t have to look for great employees; they’ll find you. An amazing example of this happened to Mustang in its fifth year. David Edgar, the senior vice president of engineering at a 100-year-old pipeline company called Mustang. One of Mustang’s cofounders, Felix, had worked with David there—which is obviously another example of how important it is to stay connected with people you used to work with. Anyway, David wanted to grow his operation; he was based in Louisiana, and he felt he needed a presence in Houston, where many projects originated.
Stunningly, Mustang learned the real reason for his call was that he wanted to buy part of Mustang—or perhaps the entire company! Bill was flattered but wasn’t interested in selling to a larger company at that time. A year later, David Edgar came back with another buyout offer, but Mustang had doubled in size, and still wasn’t interested in selling. David was so impressed by Mustang’s growth and people-oriented leadership that he quit his job and went to work for them! He decided to build a Houston pipeline group within Mustang and leave his previous company. In short, Bill had affected a “reverse acquisition,” and it cost him only David Edgar’s salary—an investment that was well worth it! Mustang was a major player in the pipeline industry within four years. That’s what can happen when you keep in touch with former colleagues and build an organization that they want to work for: you attract the best and the brightest.
“Genetic Testing” of New Hires
Bill makes a crucial point about how the structure and nature of a company affects how you hire. Or, more specifically, whom you hire to fit the company values and culture. From the very beginning of his company, he was incredibly flexible. Mustang did a wide variety of projects for a vast number of clients that necessitated moving their people to wherever they were needed or would add the most value. Therefore, people Mustang hired needed also be very flexible. Bill called this “genetic testing,” as they were looking for what they called “Mustang DNA” in new hires. It was critical to bring on board people who could adjust to constantly changing projects, market conditions, even locations—because about a third of Mustang’s people would follow projects out to the field to support construction work.
Bill’s book is full of amazing suggestions, particularly in 2022, when we’re all experiencing the tightness of the labor market. If Bill and his team could build a company with less than 5% turnover in an industry known for severe cycles and very little loyalty between employers and employees, we can too. I hope this content has been helpful for you. Stay tuned for next week when we dig deeper into Part 3 of the Mustang culture. Today’s post covers material from pages 49 – 53 in Culture Code Champions.
Consultants in Retained Search & Leadership Advisory