An internal market for the company’s stock, and a company culture of ‘just get it done’ are two key drivers of the firm’s success.
By Dale D. Conger
CobbFendley (Hot Firm #21 for 2016) was formed in Houston in 1980 by John “Odis” Cobb and William Fendley to provide professional civil engineering and land surveying services. In addition to its headquarters in Houston, CobbFendley has regional offices throughout Texas, and in New Mexico, Louisiana, and Utah. The civil engineering and surveying firm works for public and private clients almost on a 50-50 basis.
The firm has a few winning ideas on incentive compensation and employee ownership, and has an interesting take on company culture.
- Incentive compensation/bonus/employee ownership. Our founders created an environment to perpetuate the company after their retirement. An ESOP, or employee stock ownership plan, was established to begin the financing of their transition, but the majority of the ownership was passed to a group of senior managers and to the company treasury. This “internal sale” most assuredly generated less capital return to the founders than they would have seen with an outside sale, but they valued seeing the company continue after they were retired. There is no right answer to the question of whether to sell a firm. It just comes down to whether the goal is maximum return to the owners, or whether there are other valuable outcomes, such as the continuation of the firm as an independent business. Through a generous incentive compensation program, direct ownership of company stock is made available to selected staff. About 10 percent of the staff owns shares directly, in addition to their ESOP participation. The stock is made desirable by the steady increase in value as the firm grows and by salary bonuses. Many managers participate in numerically derived incentive compensation plans that reward good performance of their groups. These managers’ pursuits of their goals are also a key to the continued growth and success of the firm. As they seek to achieve the annual goals laid out for them, their groups grow naturally and generate profits, creating a rising tide for the company. This all works to create an internal market for the stock held by the most senior stockholders, who are under a mandatory “sell-down” arrangement to keep stock from becoming concentrated in too few hands and causing a future outside sale crisis.
- Company culture. This term comes up frequently in conversations around our firm. We do a lot of our college recruiting through internships and we find that even the interns will refer to our culture as one of the attractive things about the firm. So, if we could actually describe our culture – we might have something! Seriously, it is not something you can design, implement, or change easily. It seems to flow from the management approach of the firm. We always strive to give clients what they need, not what we are trying to sell. We stay true to our stated agreements and finish our projects. We “make it right” if there is a problem. We value our people’s opinions and time. Our leaders pitch in and help wherever there is a need. We find that people making the transition into our firm from large firms are sometimes disoriented by the lack of hierarchy and the “just get it done” approach we follow. And lastly, our corporate organization follows the concept that we have clients as well – our people. The organization is here to serve the staff – to allow them to do their work as well and efficiently as possible with minimal distractions from “business stuff.”