Ownership: Montell Irvin

Apr 13, 2020

President and CEO of Ramey Kemp & Assoc. (Raleigh, NC), a transportation engineering, planning, and design firm founded in 1992.

By Liisa Andreassen Correspondent

In addition to being president and CEO of Ramey Kemp & Assoc., Irvin is also active in a number of organizations and was appointed to serve on the Hurricane Matthew Recovery Committee. He believes the firm’s culture of ownership is what continues to drive it forward to success.

“Everything changed when we figured out the ESOP,” Irvin says. “It has been a wonderful way for us not only to spread a culture of ownership throughout the firm, but it is allowing the original owners to transition ownership in an orderly way that is beneficial to everyone, which if not done properly can lead to major pitfalls.”

A conversation with Montell (Monty) Irvin.

The Zweig Letter: How has COVID-19 impacted your firm’s policy on telecommuting/working remotely?

Montell (Monty) Irvin: We’ve always had a fairly flexible work environment and allow team members, along with their supervisors, to determine the best work situation for them and their team. This has generally been done on a case-by-case basis with no company-wide policy in place. We went on a company-wide lockdown Tuesday, March 17th and had all staff working remotely the next day. We had a company-wide (all hands-on deck) “TEAMS” meeting the morning of March 19th. I’m not saying all firms can operate without hard policies in place for everything imaginable, but we do.

We have policies in place to follow the law and to limit our risk, but we operate on the premise that we are all adults, professionals, and owners (we’re an ESOP), and if you are someone who needs to be told what and how to do everything or someone who “games the system,” then you will not fit in well with our firm.

TZL: What are the three to four key business performance indicators that you watch most carefully? Do you share that information with your staff?

MI: We developed a report a number of years ago that we call the “Summary by Discipline/Office” report. This monthly report includes previous months as well as YTD totals and presents numerous metrics that everyone from a group manager and above receives. We’re a pretty open-book company. Metrics in this report include total revenue, expenses, OH allocation, P/L, headcount, direct labor hours, utilization rate, effective multiplier, and revenue factor. We also share proposal hit rate, but not on that report.

TZL: How far into the future are you able to reliably predict your workload and cashflow?

MI: Prior to the Great Recession, it was approximately four to six weeks because we were primarily doing private sector traffic studies/design work. We now have a 50/50 mix of public/private work and everyone now understands how cashflow impacts us; we have a fairly clear picture six to 12 months ahead, but one truly never knows what’s around the corner.

TZL: How has COVID-19 affected your business on a daily basis?

MI: It’s too early to really tell. Obviously, we aren’t in our offices and everyone is having to get used to working remotely, but we are adapting very quickly. You know, there are some inefficiencies with working in an office – getting ready/commuting, chit-chat, unnecessary meetings, etc. that is minimized with working remotely. However, there are some folks with kids in the house, connectivity issues, etc. that could add some challenges, so I’m not exactly sure how much it’s impacting us at this point – it may be a wash.

TZL: Is change management a topic regularly addressed by the leadership at your firm? If so, elaborate.

MI: I’m definitely not running around with a solution looking for a problem, but I am constantly looking to be better in everything we do. I set a goal in 2014 to cut paper use by 50 percent within two to three years and be as close to paperless as possible by 2020. I did this not to save trees (which I’m not opposed to doing), but because I know it will drive efficiencies in our firm. We still have a ways to go to reach this goal, but I can see it’s working because our people are changing their behavior and looking for ways to be more efficient.

TZL: How often do you valuate your firm and what key metrics do you use in the process? Do you valuate using in-house staff or is it outsourced?

MI: Before starting our ESOP in 2004, we calculated our value internally using a big ole spreadsheet. Since 2004, we’ve been using an outside firm to handle our annual valuations. We provide them the normal financial documents (balance sheet, income statement, tax returns, etc.), but they also look at backlog, WIP, A/R, staff size/experience, market conditions, overall U.S. economy, and they interview folks within the firm to get a feel for how things are going – it’s a pretty intensive effort.

TZL: What measures are you taking to protect your employees during the COVID-19 crisis?

MI: Healthwise, I sent everyone home and I’m highly recommending they stay home. They are supposed to get approval from me to visit any of our offices, which I generally allow on a very limited basis. They know I will not be happy if I learn someone is in an office without my approval. Other than reminding them to follow CDC prevention guidelines, I’m not sure what else I should be doing.

TZL: What financial metrics do you monitor to gauge the health of your firm?

MI: We look at the normal industry metrics – revenue growth, revenue factor, etc., but cash is king in our house.

TZL: Ownership transition can be tricky, to say the least. What’s the key to ensuring a smooth passing of the baton? What’s the biggest pitfall to avoid?

MI: When our founder, Ramey Kemp (who founded our firm in 1992), and I were having conversations about me joining the firm in 1994 (he was 53 and I was 31), ownership and ownership/leadership transition were major topics of discussion. I borrowed money to buy some of his stock, however, it was difficult to get others over the years to do so – and it wasn’t for a lack of trying. Everything changed when we figured out the ESOP. It has been a wonderful way for us not only to spread a culture of ownership throughout the firm, but it is allowing the original owners to transition ownership in an orderly way that is beneficial to everyone, which if not done properly can lead to major pitfalls.

TZL: Are you seeking some kind of financial assistance during this COVID-19 crisis? If so, what type?

MI: I learned a lot of lessons from the Great Recession and one of them is cash is king. I’ve positioned our firm to weather some pretty tough conditions, but we are in uncharted waters, so I’m looking at all my options. We set up a fairly large LOC last year, when we didn’t need it; that’s an option (but I hate debt). I am also looking into the SBA 7a loan. The pros seem to outweigh the cons, but I don’t know all the details at this time.

TZL: They say failure is a great teacher. What’s the biggest lesson you’ve had to learn the hard way?

MI: I’m sure a lot of firms that went through the Great Recession would admit the same thing, but we were not diversified well enough in 2008-2009. I’m not letting that happen again.

TZL: Research shows that PMs are overworked, understaffed, and that many firms do not have formal training programs for PMs. What is your firm doing to support its PMs?

MI: In addition to sending folks at all levels to external training, we started Ramey Kemp Academy 1.0 and 2.0 a few years ago. RKA 1.0 is mostly for folks in the two to five year experience range to learn soft skills such as how to be a great person and teammate. They focus on communication skills, personal and financial management, etc. RKA 2.0 is mostly for folks in the five to 10 year experience range (rookie and veteran PMs) to learn how to be great leaders and managers, but they also focus on being a great person as well, which includes making sure they have a good work/life balance.

TZL: How are you staying in touch with your clients during the COVID-19 pandemic?

MI: We sent out a communication-blast like just about every other firm on the planet letting our clients know we had their back during this crisis, but I had to overcome my reluctance to do this. We have our clients’ backs anyway so why is this situation any different? Since proactive communication is critical during this time, we’re asking all of our teammates to contact our clients, teaming partners, etc. to first see how they are doing; then discuss their project; and then let them know we are coming up with creative ways to get their projects completed on time during this unprecedented situation.

TZL: How many years of experience – or large enough book of business – is enough to become a principal in your firm? Are you naming principals in their 20s or 30s?

MI: I tell people all the time that “longevity doesn’t equal leadership” in our company. I’m promoting the best person for the job, no matter what – if they happen to be in their 30s then so be it.

TZL: In one word or phrase, what do you describe as your number one job responsibility as CEO?

MI: Creating a sound and sustainable company for our employee-owners’ existing and future well-being.

TZL: What happens to the firm if you leave tomorrow?

MI: You mean after the big party celebrating I’m gone? Although I’m hoping for a more orderly transition, if something were to happen to me then my leadership team, advisory board, and our board of directors would be tasked with finding us a new CEO. They know it is in the best interest of our employee-owners to look internally as well as externally to find the best person for the job and I’m confident they will select someone who will continue to successfully move our company forward.

A couple years ago, I announced I would be out of the company when I’m 65 years old or we are 200 people, whichever comes first. Since we are still several years away from that, a more orderly transition will be for us to do an internal/external search for a CEO starting about a year before that time. I’m hoping to have someone in place that will be a strong servant-leader who is a visionary, and someone who understands a culture of ownership and can get up to speed quickly. I don’t plan on being around much unless it’s absolutely necessary. I’ve not met a hobby I didn’t enjoy and I’m really looking forward to finishing the Appalachian Trail. I’ve been section-hiking it for years and plan to knock out the remaining miles when I’m retired.

TZL: A firm’s longevity is valuable. What are you doing to encourage your staff to stick around?

MI: Our turnover rate has been low for many years so we must be on the right track, however, we don’t take anything for granted. We let everyone know, especially when speaking to younger staff, that we are growing and providing a lot of career advancement opportunities. As part of our reorganization, we are implementing a Career Advancement Development planning tool that documents requirements to advance in our firm – with timelines. We also have a fairly robust profit sharing program – ESOP, 6 percent match on 401(k), 100 percent employee-only health care premiums, paid by RKA, etc. I think growth opportunities plus personal wealth building that can occur by staying in our firm and making sure it’s profitable are clear differentiators between us and the grass on the other side of the fence.

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