Bill McCarthy thinks the construction industry still has some difficult days ahead.

The recent recession really belted the segment on the chin, and in some locations, half of the area’s construction workers were unemployed. Depending on the region, there have been some sparks of activity, but a return to previous levels is still in the distance.

“When people ask, we really don’t see the construction economy returning to some sort of normal until 2014 or 2015,” says McCarthy, president of Pepper Construction Co. of Indiana. “There are still tough times for the industry.”

During a downturn, it’s a chance to learn some things about your company, develop some new strategies, build better relationships with your customers ? and even reinvent yourself.

“What we’ve tried to do is use this opportunity to go back and reinvest in the company so that we are a better company coming out of this economy than we were going into it and positioning ourselves for long-term growth,” he says. “That’s really been our kind of mantra and what we’ve done.”

To start looking at matters from a strategic planning standpoint, McCarthy had a SWOT analysis done at the senior level of the company that involved a significant portion of the employee population, questioning what were the company’s strengths, weaknesses, opportunities and threats and posing what should be done about those findings.

“We developed from that a kind of a reinforcement to continue working on some ongoing strategic initiatives and develop some new ones, some of which I’d say are more tactical and short-term things that really look at the challenges that we have right now with the economy and being able to address those in the more immediate term,” he says. “Most of what we do, however, is really focused on the long term.”

Here are some of the major initiatives McCarthy is using to engage employees, weather the tough times and give Pepper Indiana a larger share of the market.

Reinvest in employees

With 150 employees and 2010 revenue of $227 million, McCarthy was feeling the need to groom future leaders from the existing work force. But at the same time, he needed to build up the existing management team if the company was going to grow its market share.

“I was trying to come up with a plan to strengthen and invest in developing emerging leaders,” McCarthy says. “One of our good clients and friends ? Bob and Doug Bowen of Bowen Engineering ? recommended a program.”

McCarthy instituted a leadership development series with their advice. At Bowen, the program had been done three times already and had resulted in phenomenal success.

The heart of the 18-month effort at Pepper was the book and program, “The Leadership Challenge,” created by Jim Kouzes and Barry Posner. The program takes the approach that when leaders are at their best, they follow five practices: model the way, inspire a shared vision, challenge the process, enable others to act and encourage the heart.

One of the most effective methods to optimize the benefits of “The Leadership Challenge” was to involve senior management in the teaching efforts.

“We asked pairs of our senior leaders to teach a session, and it was really engaging, very successful,” McCarthy says. “That old idea that you really don’t learn something until you have to teach somebody about it is very powerful.”

In addition, exercises which expand the comfort zone of the participants were beneficial.

“We paired up one of the senior leaders in a better protégé relationship with one of our emerging leaders, so you couldn’t have a direct reporting relationship with that person,” he says. “It was only people who didn’t work directly with each other. The protégés chose the mentors and again ? a highly successful and kind of career development and coaching resulted ? and I think it was really good for our senior managers as well because it indirectly created some accountability for them.”

You might consider driving the program to levels lower that those at the leadership level.

“Also, develop a program as sort of a companion to this for your project assistants, the old word would be secretaries, who are vital communication elements for your projects between your client and all the other superintendants ? they are like the critical hub in all of that and could really benefit from this,” McCarthy says.

Another effort to get employees involved included obtaining a volunteer leadership position. McCarthy adapted this idea from one the Bowens developed. You need a certain size of management if you really want to let everyone do their job and also teach, but with some tinkering, you can find a way that works for your size of company.

“Ask each of the participants to find something they are passionate about in the community and take a volunteer leadership position,” McCarthy says. “It gave people the extra nudge to take that extra step to lead the baseball league.

“You can imagine it’s enriching for the person, it’s great for our company to get our people out in the community, and it was really a nice add-on to that program. You get to put into practice some things that maybe you don’t get an opportunity to do every day in your work life or your personal life.”

Do 360-degree feedback reviews of each participant and map those on the leadership challenge traits to measure those against the key leadership traits that authors Kouzes and Posner developed through their research.

“As we got to the end of the program, we redid the 360 and saw in a composite as we looked at each participant really significant improvements in all the measured areas,” McCarthy says. “For some of the individuals, some outstanding improvements occurred.

“In a competitive work environment, as we come out of this recession, I also think we’ve got people more engaged here than they have been. I’ve got lots of little stories that I’ve seen happen, but for me, it has really helped me in my leadership to go through the program. I think it has really been transformational to our company and will continue to be.”

Use peer teaching

While McCarthy was pleased with the leadership development progress, he needed to find a way to engage more employees to help grow market share. Using the peer-to-peer teaching method again, he put into effect a type of mentoring that would teach junior employees some of the knowledge senior employees have learned.

When some employees suggested a quarterly education session at job sites, McCarthy liked the sound of the idea and furthered reasoned that if a good suggestion such as this was put into play, that very act would help with engagement and buy-in.

This involves the junior employee who is at a job site who would give a mini-seminar to fellow junior employees about a special aspect of the job, or there might be a subcontractor come in and describe a procedure. The education session ? an opportunity to network with fellow younger employees ? is followed by a mixer or other event at the end where some of the more senior employees are invited to join in.

“I love it that these guys had the moxie to come and propose this thing and then go run it,” he says. “We’ve now handed it off because the two guys who thought of it are moving up a little bit, so they recruited two new young guys to do it. It is something that I think has been pretty neat for our company.”

This mentoring type program uses two effective tools to increase knowledge and build better teamwork: the peer method of teaching and the advantages of networking.

The peer method uses employee who are on the same skills levels to help create bridges to span gaps in learning. Since the peer teacher is on the same level, he or she can relate to other peers on a different level than would a manager, using examples that have a relationship with the job at hand.

For the peer teacher, he or she has to have the correct information to teach, and thus benefits are seen from the extra preparation. Formal lines are not likely to exist between peers as they do between a teacher and a student, and with less inhibition, information is more likely to be shared.

The benefits of networking are well-known: making yourself known and learning what others have to offer through a relationship you build and deepen over time.

One example of a mentoring opportunity involves using a tablet computer, such as an iPad, on the job site to check off quality completion points. Instead of sheaves of paper blueprints, builders work with computer files ? and up-and-coming employees as well as any employees can learn the latest methods from a peer tutor.

“Some of our young guys are using a lot of new technology; they have iPads, they have Internet-based programs that they are using to track what’s going on, and it’s just a great opportunity to explain to the other guys what are we doing on this project that could have application to our other jobs,” McCarthy said.

Reward the ideas

In an industry such as construction, there are many opportunities where an operation can be improved or a process can be altered to save time and money. McCarthy wanted to encourage innovations and reward the best ones while also making use of others that were proposed. If the ideas were coming from the frontlines, market share would increase as innovations cut costs and improved efficiency.

A quality group led by two journeyman project managers holds an annual quality concept of the year competition that recognizes the best innovative ideas. Winners are chosen by secret ballot among the employees.

“It says: that’s what happens when you innovate,” McCarthy says.

The competition is open to all employees. This year’s winner was a 25-year-old engineer who designed a device that could be put in windows being replaced from the time the current window is taken out to the time the new window went in to keep the area weather-tight.

While not only recognizing the idea, the process of innovation may open doors to other possibilities.

“Another interesting thing that happened over the course of this, the engineer came to my partner and said, ‘Hey, I would really like to switch career tracks into more of a field supervision career track,’ and I think part of it came from his experience on that project,” McCarthy says. “So we’ve switched him over to working with one of our senior guys on a large project where he’s developing his skills there.”

The winner for the previous year also moved up the ladder. He re-engineered the entire concrete process used at a hospital construction site.

“I remember when he won this thing, he stood up and said, ‘Boy, I think I’m winning an award for messing with something,’” McCarthy says. “So, it was great to see how that went. That guy is now one of our quality leaders. It’s impressive how that develops.”

As for the ideas that don’t win, their value is recognized, and they are distributed throughout the company as alternative valuable concepts. About 50 entries were received this year.

“Even though they didn’t win, they’re good ideas,” he says. “It’s amazing. Many of them were inspired after we had a challenge, after something didn’t work right or what did we do in the face of some adversity or difficult challenges. People are stepping back and saying, ‘OK, what can we learn from this so that we do get better?’”

How to reach: Pepper Construction of Indiana, (317) 681-1000 or

The McCarthy File

Bill McCarthy


Pepper Construction Co. of Indiana.

Born: Chicago, Ill. I worked for 15 years for Pepper Construction there. We had started a large hospital project and wanted to really to expand our presence in Indiana, so the CEO of the company at the time, Stan Pepper, asked if I would move here with my family to have a more full-service presence. So I moved here in 1995, and I absolutely love it. We had three boys at the time; we now have four. This is home to us. We absolutely love it. I visit Chicago probably once a month because that’s where our corporate headquarters is, my wife’s family lives there and so forth. But we just love Indiana, and it’s been a wonderful move for us.

Education: University of Illinois, degree in architecture. I also have a master’s in business from Northwestern University, from the Kellogg School of Management.

First job: I was a paperboy at age 11, and I loved it. My first professional job was with Pepper. I started with the company right out of college.

Who do you admire in business?

David Pepper. He is the CEO of our company. He’s a very different kind of leader than I am. I really admire that. To use a ‘Good to Great’ term, he is probably a Level 5 leader. He’s very authentic. He is a humble man, a very humble guy; down to earth. He doesn’t look like he’s a CEO out of central casting, but he’s a terrific leader. I think he does that by empowering others to lead. He always has an opinion on things, but he lets other people say their piece and gets some consensus out there before he puts his foot down on things. I think he does that extremely well. I think he has been a great leader.

What is the best business advice that you ever received?

Probably one of my more admired leaders is Richard Pepper. He has been involved in the company for probably the last 60 years, so he started with the company right out of college. He always says if you focus on the customer and serving the customer, that will lead to repeat business, and repeat business will make sure that you are profitable. It’s such a simple concept, but it’s one that really just says it all. So I would say in tough times that what I think is even more meaningful is to continue that level of commitment to client service.

What is your definition of business success?

Doing the right thing and meeting and exceeding the expectation of our clients. A job well done, win or lose, is what counts. We try to make sure that regardless of our challenges in meeting their expectations or meeting our own financial requirements that we first deliver the best job we can for them, because I think that’s what we owe everybody. Sometimes, even on a job that is a very successful job for us, there are other jobs I can think of that financially weren’t very successful but the client viewed them as successful.

Published in Indianapolis