Graham Group Ltd

Speaker A Levels have been just a common word we use almost every discussion we have. We talk about the level of the individual, the level of project, the level of demand within the company, and it's a common day language for us. Now, when I look back, I don't know how we operated without it. We wasted so much time trying to describe what it was that both the individual or the demand of the job or the requirements of the position or whatever, and now we just say it's level three, or we need a level three person, or we'd have a level four job. Once we've established the levels of projects and the demands and the levels of people's level capability, then it became really simple just to match those things up. And inevitably, when we run into an issue that would rise with an owner or a project's not going well, we'd look at it and say, well, wait a minute, that's a level three project and we got a level two individual doing it, or we've got something like that. And then because, well, DA, of course that's the problem. We didn't match up the requirements properly to the capability of the individual or the demands of the job. Almost everything we do now is focused around that. That was an undertaking that our previous CEO, tom Baxter undertook, and that was to shift our whole company from what we call level three project to level four. So we had to define what is a level three project and what is a level four project and get the entire company, first of all, to understand even what it was to define what a level three and four was, so they understood what it was we were trying to move toward. And then once we established that, we had to start to understand what kind of an organization we actually need to do to run a level four project. And that was probably a bit of a surprise, because the demand and the capability we had within our company, we realized we didn't have enough capable people at working at that level. They had lots of potential, but then it started making us, forcing us to start developing our people to get them to the proper level so that we could actually go do this work. And that takes time, of course, as well. But we soon found out where the successes were, where we didn't have the right people matched with the right kind of projects at the right level, and where we did projects were successful and where we didn't. We had issues. So I'd say that probably it was a big learning curve for us to go through that's.

Speaker A As Mike's been talking, there's obviously a lot of similarities about what they're doing, although our situation is quite different. And I heard Mike talking about the meetings that he's recently had in this room, and he talked about the board meetings. Well, obviously, we're all in Q three reporting periods because we had our board meetings last Thursday, Friday. So we're all kind of running, obviously run the same kind of cycle. Certainly, I didn't have the admin pool mic to prime me, so. But I do have a table full of hecklers, executive level hecklers over here, so I'm probably in a worse situation. So I'm going to talk this morning about, really about a level shift that was within the organization. So this was not about a merger like Mike talked about, but this is. I'm going to talk about a story about organic growth in the Graham organization and sort of how we manage our way through that and really continue to manage our way through that. So I'm going to get started here, and I'm going to start by just giving a really brief history of our company and really what led us to what we call the level shift. So just a bit of background knowledge. Our company was started by the Graham family back in 1926 and remained a family owned company up until 1984, at which time it became an employee owned company, which it remains today. At that time, 1984, we were doing about $50 million a year. So if you think about that in a family setting, $50 million a year, and it continued to grow over the next 23 years until somewhere around 2007, when it actually started to reach annual volumes about exceeding a billion dollars a year. So that's a lot of growth in 23 years at that time. In 2007. At that stage, it became quite clear that, that we needed to make a level shift, and management recognized that, and management recognized that we needed to start to adjust ourselves from this sort of mid sized company into a large company. In short, we were, at that particular stage, we were too big to be small and too small to be big. So we realized that we had to continue on with a shift. And management recognized that they're going to need some help to get that, because this was all new to them. And so about that time, they engaged. In 2007, we engaged a number of consultants, including Julian Fairfield, who some of you don't know, but Don folk, who's sitting over here, that came on board and was probably on board a bit before, but really started to get involved in helping us make this shift from. From this small to a larger organization in order to do that, we realized that we would have to, that there's going to mean a lot of changes to the organization. The first thing that we probably would realize that we're going to be up against, that we're going to have to change from our whole way of thinking, from, from a culture aspect, from an opportunistic type approach to more of a strategic approach. So that was a major shift that we knew we were going to be going after. The other thing that we realized is that we're going to have to shift our whole style from a collegiate to more, as I've put there, a formal, because again, with a collegiate you can imagine if you're growing from a small company, a family owned company. Everybody was used to communicating, for instance, through the water cooler and everybody knew what everybody else was doing. So we realized that whole style of management was going to be a major change. The other thing is that we realized that we needed to strengthen our organization and from really a small, I'm going to say it was maybe a level four organization to a much bigger organization. Now there is a number of what we were really after is we also realized that we needed to change at that time in order to step out of that midsize firm into a large firm. We also need to change the type of projects that we're going after because we're going after what we call, what we now call level two and three projects. And I'll explain that a little bit differently later. And we realized that we need to make this jump up into level four projects. And there were a number of drivers that really necessitated this continued growth thing. So the first thing was that our employees and unitholders by that time had already had an expectation of continued growth. And they were continued growth for the organization and continued growth for all of them. Personally. We also recognized that there was a bunch of advantages that would come along with going after bigger and bigger projects also meant that bigger projects were longer projects. And we realized that going after bigger projects would also provide us another set of unique opportunities. Because obviously bigger projects would give us the opportunity to start doing longer term planning instead of these short stop and starts. It was going to allow us to start planning for better cash flow over a longer period of time, obviously better continuity of our human resources because we could plan those over a longer time. And we also run a fleet with a large fleet of equipment with roughly 4000 pieces of varying size. And we realized that that would also give us better usage of that equipment. So a number of synergies there we also realized that if we could make a big enough step into much larger projects, that would also give us an opportunity to start partnering with others. And really through that whole process of longer projects, it would actually start to recession proof us. It was a little ironic or a little fortunate. Lucky, whatever. Our CEO always had a good gut. And remember, I'm talking about 2007, and we talked about getting prepared for recession proofing so that we could bridge the gap of a downturn in the industry by having these longer projects that would reach out and cover that gap. And we talked about the advantages of being able to do that, because obviously, if you're going to buy projects in boom time and you can deliver them in downturn times, it's a huge profitability. So this is 2007, pre 2008, just coincidentally. So stroke of luck perhaps, but the good guys are also luckier. So that was one of the key drivers. So in that process, I'll talk a bit more about the ro on the next slide here. As I mentioned earlier, we started by, we used an Ro and level theory to start creating a bigger level six theory. So that was sort of the part of the transformation that dawn helped us through to do this. We started with a number of things. We started by evaluating our existing management capabilities, started talking about what level, what capability we had within our organization. The next big step, which is a little bit out of, is that we established a criteria for determining project levels, because we're trying to create, understand, this is the level of projects that we're doing, and this is the level of projects we wanted to go to. So we established project levels starting with level one to five, and so we can start to categorize the projects. For instance, they were categorized over. There's a number of criteria that we used to try to categorize the levels of the projects, and they were primarily dollars in time or it was resource demands or logistics. So obviously, a million dollars isn't a big job, but if you got to do a million dollars in one day, that becomes a big job. So we started to establish some criteria to try to figure out a balance of levels. At the end of the day, the projects that we're kind of going after is what we call level four. So, for instance, a level four project would be projects that would traditionally range in $100 to $500 million, or perhaps a partner on a billion dollar job. Or it could be people that are a project that had multiple resources, where you've got literally hundreds of self performed employees that you're managing through this, because that adds compliance, complexity, and I'll talk about some of the other logistical ones later on. We also realized that we needed to build a unique type of capability within the organization. So we set about building up a matrix organization that would basically house a number of specific experts that would be able to support the increased capability, would provide capability and support the increased complexity of the projects that we're going to go after. As a result, this ended up with 16 areas of expertise starting all the way from legal and HSE, and I could list them all out here, I won't bother. But it was 16 areas of expertise, and then there were suborganizations within those areas of expertise that would range with management capability sub levels, probably from level three to five. So after that preparation, and with that preparation, preparation in hand, we started our level shift. With that in hand, we started looking at where our core strengths were, and we recognized that our core strengths were probably in our industrials, in our civil infrastructure. So our civil infrastructure sort of made the first move into major projects. And so they were the first one to enter what we call level four projects. Shortly behind that, our industrial group started to move into power generation and in some projects up in the Edmonton region, and that came along at the same time that those two groups were starting to work on level four projects and starting to get the experience level of that. We were trying to get our building group or social infrastructure group tried basically increase their level of projects from what we call level two to level three projects. So they were busy moving along, trying to get their level up and trying to catch the train, so to speak, of the rest of the organizations. And then along came p three s in around 2008, and that was a shakeup to our whole world. What the p three s basically did to us is that it accelerated the entire program for us. So I'm going to talk a little bit about the p three s with the p three s coming along. I'm not sure if you're familiar with p three s, but p three s are private partner, private public partnerships. And when they came along, we were very fortunate to get some early wins. And with those early wins, it accelerated, it basically accelerated the whole program and accelerated a lot of our learnings. Infrastructure was fortunate enough to win a number of ring roads, so they won the Northeast Stony trail program here and the Northwest Anthony Hendy in Calgary. And that led on to a number of other major project wins and things like the West LRT and Calgary and North LRT. And more recently, they've used some of the learnings out of that to move into the transmission lines that they're doing up in Edmonton, Heartland area and through interior mainland of BC. Meanwhile, the building group sort of took a bit of a leap of faith, I'd have to say. And they were successful in winning the first big social infrastructure p three here in Calgary. They won the ASAP one school program, which then followed with winning the ASAP two program. However, coincidentally, about the same time that we won the ASAP one program, we also won a p three, a set of p three s in BC, a number of hospitals in Colon and Vernon. So all of a sudden, we won two large projects at the same time, which if it doesn't go outside of this room, we didn't want both of them. We did, but we didn't. We were prepared for one of them, but we weren't prepared for two of them. So therein starts to drive goals and ambitions, and so you talk about accelerating a program that really forces you dig down and start to look about how you're going to do this thing in a more refined way because we had more work on plan than we had expected. I'm going to back up about the ASAP program and just explain a little bit about use that maybe perhaps to explain what a level four project was, can actually be ASAP one program was very simple. It was 18 schools to build. So what we would call level two projects, but it was $600 million in value. So a level two school doesn't sound like that much. But the reality was that we had to design, build and construct 18 schools in 19 months. So when you take level two, and that's $600 million of concession value, and to go from start to finish in that period of time with all those things remembering at the same time, we also had the Kelowna Vernon hospitals, which again, were in the neighbor of $450 million, very complex projects as opposed to school. We had two of those to do in almost the same timeframe, 39 months. So therein lies the challenge and also the rewards. As I mentioned, the early wins in these $500 million sort of categories really gave us a whole bunch of quick learnings that some of those projects, we also had an opportunity to both partner with and compete against international firms, because at the time, and you'll see it around the market now in our business, that the international firms from Europe and all over the world were starting to converge on Canada, because Canada was sort of the sweet spot, the evolving location for p three s. So you've got these huge foreign internationals landing into your space. So we partnered with a number of those firms on some of the larger jobs, and that really helped to, when we saw the way they were operating, that really helped us learn how to raise our game, and we were able to cross, take some of that information and cross it over to some of our existing projects that we had. It also forced us to gain and develop a whole new understanding of a whole different level. It involved complex contracts that are probably some of the most complex in the world. It forced us to start understanding other elements that we were not familiar with, elements of financing, banking, security options, all of which talked in a language we'd never even heard about. They were talking about long stop dates it, and all these different finance solutions, which is really new to our world. So it helped us break into a different look at our business from a different aspect through some of the big learnings, through the hospital projects, which are very complex, and you're dealing with doctors. So the hospitals were the same situation. We had to design, permit and build two hospitals in 39 months. So that really forced us to look about, look at how we helped us to look at and learn how to manage really large, very complex stakeholders through some pretty defined programming, through design management, through helping them to understand the construction logistics that would go along with all of that. Because we had to do this while around and during, in the middle of a working hospital that could shut you down at any particular moment because they're into a brain surgery or an ambulance had to come through. So we had to work all that out. And we realized that we needed a lot more tools in order to do that. So that forced us to start to look outside into and started to look at what was available in the industry, not just in our current industry, because they hadn't experienced a lot of this before, but to start to look abroad, some of those things. And it forced us to gain a real proficiency in a number of new systems like BIM or building information management, which is a 3d tool to help you to work through that. Electronic document control systems that we've not been exposed to before, and really some advanced scheduling techniques that was new to us. We also realized that we had to develop conceptual, a whole different line of estimating in our world. We used to get a set of drawings that said, here's what you're supposed to build, and we could quantify that. But when you're in a design build, we're being asked to provide a firm price on a job that hasn't even been designed yet. So that forced us to start looking at other ways of estimating. So we had to develop conceptual estimating skills. For those of you that don't know about p three s, we also p three s, you win a job not by what you build, but by how well you can maintain and operate it over a 30 and finance it over a 30 year period. So that forced us to not only take our level of estimating from quantification to conceptual, but we also had to have an understanding of a band of what we call lifecycle management. So you have to be able to estimate lifecycle and all these other components over a period of time because you win it over, the total cost over a 30 year period brought back into today's dollar. So that drove a whole new level of learnings for our people and organization. Some of the other things that came out of it very quickly was that we soon realized that in order to do projects of that magnitude and in order for them to be truly successful, that we actually needed to have a complementary organization with all our partners, and that we needed to have a good integration and understanding and integration of their levels of organization with ours. So we had to find ways to determine what their level of organization is and try to find ways to match up our people across those stakeholders so that they could communicate at the right level, on the right kind of issues. So a little bit about p three complexities. So now I'm going to talk a little bit about lessons learned. We were certainly learning a lot of lessons as we were going. And now that I look back at sort of the level shift, which when I talk about the level shift, which certainly is not complete, we are well into it and continue to strive forward. There are some clear lessons that we now take into consideration on any of our future project pursuits. So I put a few of them on this slide here. A couple of quick lessons that we learned is that strategy always wins over hard work probably 90% of the time, and I'm going to guess the other 10% of the time that strategy does and win is probably luck. So hard work isn't the only answer. We also realize that level four projects actually require level four management, and you require level four organization. So probably what that indirectly says is that we were successful in properly aligning our level, our project levels, to match our organizational levels, because they seem to match, because the management levels of an ro organization actually match to what our requirements are in a project level. So now we can just almost talk level four project versus level four individual, and they're synonymous. They just fit together some of the learnings we got out of that is we realized that in our areas of expertise in the matrix organization that we talked about, that we realized that it became very clear that if you're running a level four project, we actually need level three expertise. We don't need the management level, so we need level three expertise. So that helped clarify a lot of things. We also learned that in order to develop a program, you actually need one level higher manager. So, for instance, if you're developing a level four organization, you need a level five manager to develop a level four organization, whereas a level four manager can maintain a level four organization. So that became very clear through that process. And we also learned very quickly that challenge certainly accelerates growth. And that was something that we still face today. Looking back, we realized that complexity, if successfully delivered, also creates a huge amount of competitive advantage. When I look at some of the things that we, the advantages that we got out of successfully delivering these projects, and by the way, we did deliver the ASAP school program on time. We were actually two months ahead of schedule, and the Kelowna Vernon project had a 39 month schedule, which industry said couldn't be done in 39 months. We introduced something that I learned through a program from Stephen Covey, introduced what we call the wildly important goal, which we actually got all the multiple organizations to buy into. And that project, they said couldn't be done in 39 months. We delivered nine months early. So a huge win. And if I have more time, maybe later on today, I'll talk about sort of what we did within that particular team to create that kind of atmosphere. No time this morning. But certainly looking back at what that did and the opportunities it provides, it provided huge personal growth for the people within that team because they were stressed and they were challenged through that whole period, through those number of years. And it also helped us realize the opportunities as a company that we thought we were moving up into level four projects. And we realized that that also gave us an opportunity to start becoming a much bigger solution, construction solution provider for owners, because we now sort of moved out of that pure construction box, and we now started to understand a lot more of the upstream things like finance and all those aspects, so we could start to relate and tie into that part of it. And it also helped us to understand the downstream side because we're talking about maintenance of facilities over 30 years and all those parts of it. So we were forced to learn that bigger scope of it. Well, now we have something that also gave us increased capacity and opportunities with other clients, so huge gain for us. We also realized that the duration of the project also impacts a number of things and it impacts the entire organization throughout. Impacts our procurement systems, business planning, all our expertise groups. We realized that we need to have more defined roles and it really challenged our whole financial core systems that we were operating on. So that sort of is a very quick summary of our story. What I'm going to talk about, just to close here, is sort of the what now and where we're moving to after five years. Because we started this in 2007, our annual volumes have jumped from billion dollar mark to 2.3 billion, 2.2 billion probably this year, which is a big internal jump for us, a big jump for us from where we were. It's also solidified our reputation because of being able to deliver these projects in a different way and really helped with our reputation both nationally and to some degree internationally, down into the US. And that has really changed to where internationals that we used to be chasing to partner with, they're now chasing us to partner with them. So it's a bit of a change. Our increasing success has also forced us to continually improve our human resource capability and also our corporate capability in systems because we've realized that we've started to outgrow some of those things. Our organizational structure continues to evolve, including recent changes. We changed to a market sector based organization in operational. And we're also now moving to a more integrated team to, to where we're starting to embed to a larger degree our matrix organization people embed them into the operations as much as we can without tearing apart the matrix organization to try to get a more integrated team to deliver these things. And things are continuing to grow. So we're now in the process looking forward. We're now adjusting our vision and tactics to really to take advantage of our new found capabilities and the new markets that we're finding ourselves in. Certainly at the same time, we've also realized through this huge amount of growth that you also, there's a lot of loose areas. You get in there, you can kind of get pretty fat. And we've got some non productive areas that we need to clean up or some just redundant areas that we don't need anymore because things have changed. So we're in the process right now of trying to clean up some of those, getting prepared for this next vision and this next strategic jump. And so we're right now planning a level seven organization or 6.5 to seven organization. And we're preparing over the next five years to double in size again to 5 billion a year. And preparing for level five projects. So that's sort of where we are right now and it's exciting and interesting time.

Speaker B Thank you very much, Grant. That was just a tremendous story. Just in the interest of time, before we break, I think what we'll do a little change up is let's just think of some questions that you've got and we can allow some time for people just to use the mics that are on the floor and just feel free to come up and ask a question of Grant.

Speaker C When this is over, I'll take it to break. I have an announcement to make.

Speaker B This.

Speaker D Yes, my name is Charlie Quarry. I had a question about the matrix organization. By that I think you mean projectized across functions either right, in the literature we talk about a strong matrix or a weak matrix or a balanced matrix. Can you describe that in terms of requisite organization theory and how the two, you see them coming together?

Speaker A Well, just to explain what we're talking about, what we did on our matrix organization, if you think about it as a grid, we had our operational units so our different market sectors that were led by level five and level six operations managers, that would be a vertical. And then we created 16 areas of expertise that went horizontal through that. So it would include everything, things like HSE, QAQC, perhaps legal, operational, accounting, communications, all those sorts of things. So these people could move. So we realized that QA QC guy could actually work within, outside of. They could cross over from group to group. So we would built, I would say we had level five management. It was probably more like level four matrix organization. And these level fours could then move across within the particular bands of our market sector so they would crisscross over, which was huge. So we had all that. That way we could just pull on the resources we needed in the particular group depending on where the demands were. But obviously it was huge because it then gave career paths for all those individuals within the matrix organization. And it also gave them continuity of work because they could now move from division to vision to division and continue their work and again move up within a suborganization in the matrix side. I don't know if that's explaining what you're after, but.

Speaker B Could we just. Sorry, we have to allow other people an opportunity question.

Speaker A Sorry.

Speaker B Thanks. Over here.

Speaker A Catch me later. I'll talk about the conflicts.

Speaker E Okay. Matt, my name is Eve Wallet. You made a comment that triggered my interest because we used to be an employee owned company. You made reference to that. Can you explain to me the structure and it may lead to my real question.

Speaker A So we're very simple. We're employee owned. Getting some feedback. We're an employee owned company and it's very simple structure. Our employees buy in at book value, which is probably half to a third of what it would be outside of on perhaps a public structure. They buy in at book value. They sell at book value. But obviously the returns are multiplied by potentially twice as much because you're buying at half the price. And it's very simple. One structure, all voting and all employee groups, right from our front receptionist to our CEO, all has voting shares calculated very simply by the book value of the company divided by the number of shares. Very simple.

Speaker E Is there an obligation for. Is there an obligation for employees to.

Speaker A No obligation, but it's actually the opposite because they are posturing and wanting more and more shares all the time. Because the returns are so significant. In fact, it becomes the biggest. The most significant part of their total compensation is in fact their LTIP or their long term share value.

Speaker E Thank you.

Speaker B Any other questions? Oh, another one.

Speaker C I feel quite safe in doing something here which is coming out. I'm an engineer.

Speaker A Grant.

Speaker C Thanks for that. It's interesting. It's also quite a bit of deja vu because I guess 20 years ago I was involved in the same thing in Australia. So I have some particular interests. I could range over a number of topics, but the one that interests me most today, given what you're doing, is this. Here's the question. What, if any, organizational and managerial or process arrangements have you put in place to manage the level four customer relationship and level four marketing? And by the way, I think some of your projects are level five.

Speaker A We're not quite sure what level five and four, but we do realize whatever it was, luck or whatever, they seem to match up to our ro organization because level four requires a level four manager. Kind of doesn't matter. So back to the question, what we're putting in place. Let me think about this a little bit. What we are doing right now is we are actually making changes within our organization to really address that issue. How can I explain this? Actually, I'm going to. I'm forgetting the question.

Speaker C It's about building and managing level four relationships. Level four. To get level four projects, when you're looking at the level two project world, you know, you're basically bidding. But when you're into the level four project world, it's a different piece of work.

Speaker A So I guess to answer that the best way is I touched on it briefly that I talked about how we had to have matching we realized that we needed to have matching organizational structures between. We had to identify the organizational structure of our partners and our key stakeholders. So once we could identify their structure and identify, then we can figure out who was who in their zoo. We could align our people to those particular people. So what we did is we made sure that we aligned all of our organizations crosswise between the various stakeholders, whether it's designers or owners. So we made sure that we got our level two people communicating with their level two and their level four is with fours. We made sure that we developed relationships in advance between our level five guys and their level five guys before there became problems. Because when there became problems, it was as simple as making a phone call from a level five to five and say, hey, I'm hearing some stories within my organization that this thing's going sideways. Is that true? And you could have an intelligent conversation and then drive back down into your organizations to make those things happen. And the key was making sure that you develop those relationships across the stakeholders before you had a problem, because otherwise you're already on the other side of the fence. So we learned some lessons out of that. So when we're looking at some of the things that we're looking at moving forward, when we're developing the next level seven organization, which is talking about taking advantage of the whole upstream and downstream side of our newfound business, were also talking about introducing a client stream that makes sure a particular group of individuals whose entire being is to make sure that we understand the client and able to move them across through this and can make sure that those proper connections are made with all of our groups so that we can maintain that through a very long period of time.

SPEAKER A

First off, thanks to everyone for the opportunity to spend a little time with you today. It's a pleasure and it's enjoyable. And I'm not sure I can speak coherently. My head is full of whole list of ideas and I've been trying to scribble them down as opposed to having them bang around between my ears and get confused. First thing is I just want to sort of take a minute to focus my discussion. What I decided to do was so as to not trip over #####. #####'# done a great job of talking about sort of a recent transformation. What I wanted to do was just go back a little bit and aim some comments, particularly at those of you who I feel for and identify with, those of you who are working at considering adopting these principles. It's a big step. It's an important step. I don't see any other way to go, but it's still a difficult, very, very committed plan for an organization. So I wanted to talk about those early days when we got going and some of the things that happened around those initial decisions and some of the key drivers in the front end of this for us. And I think that avoids some redundancy and maybe talks a little bit about the importance of our relationship with ### and some of the messages that we sent to our people and so forth and our clients in those early days. So I've been with the organization I guess now going on 17 years. So when I joined, we were very small and we were very informal and grant referred to the collegial element of our business. I joined a group that was extremely appealing to me. I'm a bit of an adrenaline junkie and I came across this organization that was full of incredibly committed people, passionate people, very high levels of ownership, very, very intense bunch. And to start off with, I thought I knew a few things. It was a bit like joining a motorcycle gang. First you had to go and knock off a liquor store before anyone would talk to you. So off I went to the bush. And after a whole number of years in northern Saskatchewan, bumping around uranium mines or a refinery row in Edmonton, or work at St. Coral mines in the south, a lot of interesting work, pulp and paper, I, from a personal angle, had an opportunity to move to Calgary. The reason that little personal detail is important is it was at that time our CEO had decided that he was facing a couple of problems. One of them was scalability. He looked at the organization and said, I don't think we have what it is going to take to go to the next level here. He had a very strong gut, as ##### mentioned, and so scalability was an issue. And the second thing was that he had a prime sort of concern about institutionalizing ######'# knowledge and finding a way to standardize those things that we knew so we could develop the capability to train and to share and to not be reinventing the wheel every morning. So from those two decisions, he took a strong, hard look at our organizational structure. And at the same time, he started what became the matrix at ###### and what ##### referred to as 15 or so expertise teams that were going to take on all the specialized bits of knowledge in the organization to try to enable more time and latitude for our project managers to manage projects and so on and so forth. So we undertook those things. And I think it was a bit confusing at first, but we were fortunate enough to have ###. We gathered our managers together at our annual meeting in Banff. And ###, I don't know, it was probably about a two or three hour process, but ### walked through all the fundamentals. And so I was thinking back to new organizations, organizations thinking about adopting these principles. And I thought, I'm going to go back to those original principles and just look at those with fresh eyes for a minute and just use them as a bit of a skeleton and sort of weave a little meat on those bones and weave our own story around it for a few minutes. I think it's an effective way. It was helpful for me to remember, I guess, what it is we've been trying to achieve and maybe to be a little critical of our own path and some things that might provide you with some assistance. So if you read the little bit in the folder, it's a fairly standard story, and that story will repeat itself for all of the participants. Here, you'll see that we began with a job of assessing people. And from assessing people, we went to assessing work and trying to learn the concept of CIP, and I think ####'# called it CMP. At any rate, the issue of complexity. And from there we went on trying to assign levels of complexity to projects, and from there we went on trying to assign levels of complexity to business plans and later to strategy. So it's a flow where we started very small looking at the individual, and ended up looking at our strategy and saying, what are the implications of a plan like this, of a set of aspirations like this? All of those have implications. And so ultimately, my punchline is our end goal was to try to take that arc that is the aggregate talent in our organization, and align that ARC, which is the aggregate sum of our aspirations as a business. So the natural development curve that an individual follows, if you get it right, will follow with some stretch and some tolerance. The arc of strategy as a company grows. If you can get those two things aligned, you manage risk. And I think that's what most business is about, other than making money. So I'm just going to jump into the first little package here that was facing us. That was part of what ### put on the table. And at first reading it wasn't all that impressive, I guess. And the reason it wasn't, I thought, well, that's just bloody common sense. There's not a whole lot of work to do. It's just common sense. But when you really think about the implications of this, what you have to do is ask yourself whether you are ready. It's sort of like going on a diet and exercise plan, and it's very easy to talk about. But when it's time to get out of bed at 05:00 in the morning and go running, no one feels like doing it. What happens if somebody doesn't do it? Are there consequences? So taking this on is a deep, deep commitment. If you just bump through a few of those bullets. Employees, a resource that belongs to the company. What a concept. You know, where you work, people have teams, they own those teams. Those teams are tight. Unfortunately, if you're going to unplug the pipe and manage careers, you need to provide mobility for people through various parts of the organization. The best path for an individual may not be up through your group, it may be off somewhere else. Maybe that's the exposure they need to have a career breakthrough. Organizing around work. ######'# a culture of commitment. We're an employee owned culture, and we have and continue to value our people very, very highly. So to put them aside and to look at the work feels disrespectful to the people in your group. It really does, because you ignore them in that exercise and you look at what the company needs. So that's a difficult thing to do, but it's a necessary thing to do. The CIP piece, it seemed fairly straightforward. We were a little iffy when #### started working us through the fundamentals of an assessment. But once you start to get your head around, you know, some of the tools that are foundational in the assessment process, and, you know, not just the declarative cumulative serial process piece, but that is the thing that needs to become actually a core competency for your management team. And like it or not, if you commit yourself and work with this they will start to recognize that they may not have the tools to do an assessment, nor do we want them to, but they instantly started. I think ##### referred to that this morning. People just start to think they see something or they see somebody. They listen to them talk, they watch them work, they see the business results. They instantly know where they are. The work that follows up to define roles and clarify accountabilities and authorities, people themselves start to see where they fit in the organization. As a number of you mentioned, the Mor structure was critical. I think when you put an assessment process in place, people are initially wary of it. And I'm not sure what you have experienced or will experience, but the most negative of them will immediately see it as a pigeonholing scenario. Well, someone's pigeonholing me now. They said, I'm a level two. I'm screwed. I can never run the place. When you explain to them that, a, this is about where you find yourself at this time, and we want to help you grow. We want to understand where you are so that we're not going to set you up to fail and that we're going to work with you to prescribe a path of development. And furthermore, it's not just you and your boss who you may or may not get along with. There's three people in this relationship. Ultimately, as an employee, you're responsible for your output, you know, for focused work and speaking up about your own learning, and your manager is responsible for your output and, and setting context. But that Mor is really responsible for managing the talent pool beneath that individual and providing potentially some balance in an assessment where there's personality conflicts. So employees initially began to understand that it was consistently applied and it was a relatively fair process. The assessment piece, I just can't say enough about that. It's a cornerstone. It's an absolute cornerstone, and it's a tremendously powerful bit of information. So that information has the ability to empower and to engage people and to cause them to resign if you treated improperly, you have to be very, very careful. That's not public knowledge. It's not a, you know, it's not a widely disseminated bit. It's for a very, very tight piece of senior management and the individual, and that's part of their plan. It's very, very personal information, and it has to be dealt with very carefully. So the piece about aligning our aspirations with the horsepower in the organization, that takes a little longer. That is something that happens at the executive level, where you begin with help to plot sort of the sum total of your horsepower and place that up against your plan. That is a longer process. And I just lastly, want to echo something that ##### wrote up, and that the cross functional relationships, they're the most tricky part of the equation. And I would suggest that oftentimes we started out explaining to our folks that cross functional relationships are tricky and that issues are solved through elevation. And initially, people see elevation as tattling, and elevation isn't tattling. What we've tried to say to people is that if you don't have the tools or the resources or the authority or whatever it is, to solve the issue between yourself and some other group, you have to elevate that to someone who does have the authority or the resources or whatever it happens to be to solve that. And that may go, too. So tricky. Cross functional business often will bump up two levels above the problem, not just one. It's often difficult, so don't underestimate that next slide. ###. So I just have a generic. I went and shamelessly pilfered a graphic from some of our early work when ### ### trying to explain to us how you go about plotting those core individuals, those core sources of horsepower in an organization. And one time, when I was a young manager, we had some things disappearing from a branch office. We had a fellow come in and install a surveillance camera so we could figure out what was going on. And one thing he said to me stuck with me. He said, when you put up surveillance in an organization, make sure that you're prepared for what you might see. And the assessment process, this process is a little like that. You can scare the hell out of yourself, because what you're going to see is things that make you feel great and they validate your thoughts, and it will ultimately also show you yawning gaps. So in the old days, we had a very, very strong leader. And when things got tough, he would leave boot marks on behinds, and he would peel the paint, and people would go harder and faster and things would get fixed. And when that stopped working is when we started looking at this, and it hit him like a ton of bricks. I literally mean that when he saw, I have to stop yelling at this guy. He can't understand what I'm saying. It's not fair to him. And it really exposed some of the issues that we had with structure, with gaps in the structure, with training and development that might have been required or with changes that might have been required to achieve the kinds of things we were hoping to. So very, very important process. One of the reasons. I don't know if you have a minute, Google high performance work systems. It's a sort of a sidebar, but I didn't know it at the time. But ###### was a high performance work system. And high performance work systems are characterized by transformational leadership. They're characterized by high levels of transparency. They're characterized by low status differences between individuals, very carefully managed compensation, all of those kinds of things. And like I said, I didn't know it at the time, but when I got into this organization, that's what felt so good about it. It was a high performance work system, and it had been done just on gut and not through prescription. So the reason I bring that up is that when you assess people and you pigeonhole them, one of the reasons that that went relatively well at ###### is that we had at the time a transformational leader who didn't see himself as really any more important than anyone else in the place. There was a lot of value placed on all the jobs in the organization, and we were sort of taught that the organization was upside down, that our frontline people, the estimators and the project managers, that's where we made our money. That's who the clients saw. And the whole organization was to be put in behind those guys to help them. They were the most important people in the place. And so we didn't get into a situation where people saw levels as status. And that's a trap you can fall into, where people think it's a status assignment or an importance assignment. It isn't. You have to remind them it's about a time span of discretion, and it's about giving them something that lends itself to their gifts and their particular point in development. So I think that's a really important little bit of sidebar there. Let me jump ahead. Next little piece was the beyond the individual. And the work was to really take that collective plotting of horsepower in the organization and to try to actually forecast capacity. You see what happens when you take the aggregate effect of plotting the strengths of your individuals, and you turn that into a single line. Depending on what line of business you're in, you'll see the gaps or you'll see the risk develop. You lay your business plan up against that thing, and you have an immediate form of risk assessment. It's not the whole risk assessment, but it's an important piece of risk assessment. And the way you make sure that forecast is valid is by careful attention to an MOR program where you've got more than one opinion about how things are going you've got a very, very sound performance management system, and it enables you to start laying that people piece on the business planning table. We're actually fortunate enough now with the changes that grant is leading in the organization. SAP is actually pulling historical loading of people by capability level from previous projects and laying that up as reality for our managers as they plan. So we can't fool ourselves. And it's an important element of managing risk because you end up business planning with the reality of what kind of horsepower it's taken to do that work in the past, front and center, as you predict what you're going to need to take on even more complicated things. So for us, the learning curve about what constituted complexity was fairly steep. For us, it can be, you know, as was mentioned, it can be schedule, it can be geography, it can be distance from home. We've got projects burning everywhere from Whitehorse, Yukon, to Corpus Christi, Texas. Just distance alone can create a layer of complexity, technical requirements. If you work for some of our big industrial clients, those environments are very, very complex. They're very, very integrated. All those things can add complexity. So as you learn about what constitutes complexity in your work, you can start to do those kinds of things and ensure that the planning process matches what you're up against. Second, last little piece, one of the key things that we're working on here right now, and I'll just get to it in the next slide, but with a strong focus on learning and development, is trying to ensure that we strike the right balance in helping individuals follow their own curve and helping the company meet its capability requirements. And so there's a great thing that happens when you bring people in from outside the organization. They bring with them best practices. They challenge entrenched thinking in your organization. That can be very healthy. You also have to take care to manage your culture, because your culture can be overrun with too strong a feed from outside. And if you value your culture, and that's a big part of who you are, you have to balance those things. So one of the things that you can do with a strong focus on L and D is, again, if you've got a strong performance management system, you can say, I've got the right balance of experience and input on ### ####. We're not promoting him too early. We're not training for the sake of training. We've had given him some useful experience. We're applying the right amount of training and input of this organization to help ensure that he stays moving along his path and where there are gaps. If you go to the previous slide, you forecast your capacity where there are gaps. You're going to have to bring that in from the outside. Again, assessment comes in very strongly because you now are using the same assessment processes to ask yourself what's coming in the door and where that fits in the organization. And that's a key piece of helping to reduce failure and turnover with new hires. It becomes, again, a methodology for getting that right. One of the hugest pieces of learning for me as a young manager at ###### was, like I said, I'm a bit of adrenaline junkie, I guess. And so initially I was kind of given a parachute and a fire hose, and off I went. And one of the most interesting bits of work for me was the difficult work, but the very enjoyable work of trying to help. Part of our strategy at that time was to grow through acquisitions, and we did, and we acquired a lot of smaller companies. We had fit for, you know, front and center. Did these people fit with the organization? Once that was established, then we needed to knit them together with the business. And so I often was parachuted into those kinds of new ventures, trying to help people understand who we were, how we thought, and how they fit into our organization. Having this language in this methodology, I can't even verbalize how much that simplifies things. And before I forget, one of the questions that I'm going to leave off with is that question for those with organizations where ## was implemented in only part of the organization. I'm really curious how that goes with the integration piece. But maybe it's not an issue. Just bring that up a little. Think of it. Let's jump to the next slide now. So the last piece is really just a nod to maybe one of the biggest focuses for me in an HR capacity here at the moment. I think the comment was made about making sure that you tend the garden. One of the things that's happened to us along the way, I should back up a little bit. ## for us has not been a project. It hasn't been. We started it in September and we were trying to implement it by Q two. ## has been a mindset, almost a lifestyle. It's been a way of thinking. It's twelve years old at ###### now, and it's just become how we think and how we talk to one another. It's not a project. It isn't something that we're monitoring month to month and day to day. It's just become a way of running our business and a way that makes sense to us. So as we go forward, you know, we thankfully take the time to look back. So when we went through that, well, when I started in, whatever, 95, 96, I guess we were doing about $115 million, little mom and pop, you know, going like hell. And by the time I got my 15 year service award, we were doing 2 billion in that year. Between when we started ## and today, there's 700% of growth in there for us. So to make a long story short, we just absolutely ran like hell for that whole lead up to the market downturn in zero eight. We just ran. And one. One of the things that happens when you run is everybody's focused on output, everybody's focused on execution, and you forget about the importance of management. When we started working with ###, that was probably one of his biggest hurdles to overcome, was to teach us and to remind us that management is important work. We had in those days a mindset that if you weren't banging nails or pouring concrete, that you weren't doing anything. So he had to help us as a team to understand that management, just peer management and thinking about where things are going is very, very important time spent. So right now, I guess we're a long story short, we got a little ragged in those years and we haven't been paying attention to some of the things that were the foundation of our success. And I think one of the things that grant is bringing the organization is a strong refocus on these principles and a strong refocus on the accountability bit. You talked about embedding expertise and trying to deal with some of those gaps that can occur between groups that end up wandering off in two different directions and just a larger element of accountability. So it feels good to be back at it. It feels good to kind of have a. I guess that's the upside of challenging markets, is that you have a chance to catch your breath and think about not just what you're doing, but how you're doing it. So it's been a healthy process. I think the key final piece is, and this is the piece that we haven't yet solved, is the integration piece. I think that is not easily done. I'm interested in spending a little time talking to ##### to take these principles and to link them to reward strategies and link them to your performance cycle. That's a huge accomplishment if you manage to work through that. So good on you. And I think that sort of constitutes a large part of the next step in our evolution for ##, I think that's all I know.