|PCL advertises for job applicants on truss used at bridge job in Stuart, Fla.|
At staff meetings at PCL Construction Group these days, you might not recognize everyone in the room.
To win all the work in its burgeoning backlog, Edmonton-based PCL Construction Group, a multi-market prime contractor with $3.33 billion (USD) in 2005 revenue, up 27% from 2004, has had to go on a hiring spree. The company sailed into 2006 with a $4.19 billion backlog, up from $2.2 billion in 2002.
Last year PCL picked up 552 new hires, which represents a whopping 26.7% of its total staff. In 2002, PCL only hired 182 people, which accounted for 11.2% of its staff at the time.
In 2006 PCL expects to take on at least as many people as it did in 2005.
The firm works in as great a variety of markets as any contractor in North America. It is building hotel rooms in Hawaii, bridges and roads in Florida, helping develop the oil sands fields in Canada and building out the interior of a Rainforest Café in New York State. On April 6 it will make a proposal as part of a team to work as the design-build contractor on a new federal courthouse planned in San Diego. About 65% of the workload is negotiated or relationship driven, says Peter E. Beaupré, president and COO of the company’s Denver-based U.S. operations, PCL Construction Enterprises.
While PCL has occasionally sought to increase its market share through acquisitions, picking up an industrial and a power-market contractor in recent years, its preferred path to growth is to hire new staff. The company’s favorite targets are recent graduates: they learn the PCL culture more quickly and are less likely to carry ingrained bad habits, such as adversarial attitudes toward clients.
Of course, to run projects well PCL can’t rely entirely on hiring grads. It needs experienced project managers and superintendents.
As a privately held, employee-owned company, “we are not trying to post numbers to keep our external shareholders satisfied with the appearance of growth,” says Beaupré. “And when you acquire [a company] you pay a premium and are acquiring a block of employees. We want to grow from within and select and pick individuals and integrate individually. If you acquire a company, you get a whole block that may not exactly be your culture.”
One of the foundations of PCL’s philosophy: clients aren’t opponents, even in a lump-sum environment. “Quite frankly, life is too short to be battling it out on a construction project,” says Beaupré. “There’s no reason in the world you need to be duking it out on a jobsite just because it’s lump-sum project.”
In 1992, PCL set out to teach its employees and change the company culture from too much of a win-lose mindset to a purely win-win mindset. Job candidates are tested to determine personality traits and if they show a win-lose disposition, “we will take a pass on them,” says Peter Greene, vice president, professional development.
Young hires are more interested in how much they are paid rather than in potential growth of company stock, says Greene. But mid-career people are more likely to pay attention to share value and the right to own a piece of the company.
And one of the biggest lures the company can dangle in front of prospective employees these days is PCL stock. Available for sale only to employees, shares have gained value steadily in recent years.
Last year PCL’s growing number of employee stockholders in certain classes of stock exceeded 500 and triggered U.S. regulations requiring the company to file reports with the Securities and Exchange Commission. Other big privately-held construction and engineering companies such as Kiewit and CH2M-Hill do the same. Companies often can adjust the classes of stock and rights and privileges associated with them to avoid the reporting threshold, says Scott Kolbrenner, senior vice president of Houlihan Lokey Howard & Zukin, the Los Angeles-based investment banker.
The details of PCL’s impressive performance have been in the public domain since last spring in filings by PCL Employee Holdings Ltd.
Beaupré, PCL Constructors Canada President Paul G. Douglas and PCL Construction Group CEO Ross A. Grieve are listed as the three biggest owners of shares with voting rights, with 8%, 8%and 10% respectively.
Between 2000 and 2004, PCL’s board has voted to increase the share value from $12.59 (USD) to $16.23. In 2005 the board set the value at $17.08 and last year it was increased to $17.72 a share. The stock also pays dividends, a $4.16 per share dividend last February. Add to that a bonus awarded to shareholders of $1.92 a share, and the share value increase total, with dividend and bonus re-invested, comes to $6.73, or a 39.4% return.
On its $3.33 billion (USD) 2005 revenue, PCL realized profit before bonuses and taxes of $161.1 million, well ahead of the company’s projections and its best year ever.
(Photos courtesy of PCL)