When D. Kevin Horner took the reins of Mastech as president and CEO in 2011, he had the confidence of the company’s leadership and board of directors, but the people in the business were saying, “Why him? He’s never been in the staffing business. What does he know?”
“Frankly, it was a very reasonable question,” Horner says.
Horner is an experienced IT professional, having been in the arena for the previous 30 years at Alcoa, where he served as CIO of business units in Europe and North America. Horner ended his time at Alcoa as the CIO of the entire company. Alcoa and Mastech, however, are two very different animals.
“There were some things I was very well prepared for because of my CIO experience, but there were also some gaps,” Horner says about entering his first CEO role.
In addition to his prior experience, Horner had one other ace in the hole — he had been on the board of Mastech since 2008, giving him a good grasp of the 1,000-employee, $103 million IT staffing firm’s daily business.
“Part of it was right place, right time,” Horner says. “Part of it was I was well-known by the board and part of it was I didn’t run a restaurant for the last 30 years. I had been inside of the IT services business for a very long time and I understood the IT staffing industry reasonably well.
“In fact, I understood it from the other side of the table and I knew a network of CIOs out there who are always looking for resources.”
IT industry employment in the United States is at an all-time high. The marketplace is rich in its desire for talent and there is not enough talent to go around. Before Horner could get Mastech immersed in all that opportunity, however, he had to fix a few problems the company was experiencing before its previous CEO left.
Here’s how Horner meshed his CIO background with his excitement to lead and grow a company as a first-time CEO.
Grip the situation
Coming from a $25 billion organization to a $100 million company offers plenty of differences. The same could be said when it came to the differences in Horner’s experience as a CIO and the duties he was now undertaking as a CEO.
While Horner’s experience had him prepared for a lot of what he would have to do on a daily basis, there were a few voids that he had to fill as he began to lead Mastech.
“At Alcoa we had customer and employee satisfaction measures, service performance measures. We benchmarked externally, managed our cost structure and we dealt with global culture,” he says. “That mechanism for running the organization really did prepare me to run a company.
“The second big thing that we did that really prepared me was a systemic companywide link between IT projects, innovation and business value delivered. That connection of results or outcomes back to accountability and commitment for achieving those results really helped now that I am where I am.”
Horner also drove a standardization program at Alcoa and across the world, which taught him that process matters when you try to create scale. While process matters, people matter more.
“Mastech is a people business and our product is talented people who get linked to our customer’s job needs in the marketplace.”
Some of the gaps that the CIO job didn’t prepare Horner for included those regarding strategy.
“Strategy for the business is a CEO role, which is now mine,” he says. “That’s a blessing and a curse. That doesn’t mean I didn’t do strategy, because I did, but it was either in response to business strategy or an influencer to business strategy.
“As the CEO, you are business strategy. That’s a key piece of what your job is.”
Uncover the issues
As Horner got settled into his new position, he didn’t have much time to sit back and enjoy the view from the corner office. He was quickly analyzing Mastech and moving forward.
“I met with my board with a preliminary set of thoughts and a preliminary action plan 10 days after I took the job,” Horner says. “Within 10 days I knew that I had a segmented business that, to put it mildly, as a board member I didn’t see the detailed segments and sub-segments of, I saw things on a rolled-up basis. On a rolled-up basis it looked like there was improvement happening and so on.”
Within the first five working days, Horner found out that Mastech had a segment of business whose cost far exceeded its revenue. That segment was a reasonably significant part of the company that clearly wasn’t working.
“As we peeled back the onion on each segment of the business, I didn’t sleep a whole lot in those first couple of weeks, but it was really easy to see that we had a couple of problems,” he says. “In that particular business, it was clear we needed to close several locations and change the executive leader who was running the business.
“We closed two locations, restructured the organization around two P&L heads, eliminated an executive leadership role, and challenged the remaining two P&L heads to grow what was left of the ‘old organization.’”
Mastech had another large-scale area where Horner realized that the cost structure to run the business far exceeded the scale of the business.
“It wasn’t that the people were bad,” he says. “The business was just not growing at a rate that would support the cost structure. So we adjusted that cost structure.”
Horner made these business analyses and decisions within his first two weeks at Mastech.
“By my 10th day at Mastech we had a short-term action plan to fix some basic issues,” Horner says. “We had board support for the actions, and we had an implementation plan for the actions. We executed one in the first month and the second one in the second month.”
To discover these kinds of problems within a business you haven’t run before, you have to have an idea of where to start digging. In Horner’s case, that meant understanding financials.
“On the first working day of every month at Alcoa, I knew the IT cost for the entire company around the world,” Horner says. “At Mastech, financial understanding and business analysis wasn’t a core competency for the line management, other than our CFO. Fortunately, it was something that came fairly naturally for me given my Alcoa experience. What seemed like a very natural place to look for me hadn’t really been examined.”
Find growth opportunities
Once Horner had discovered the issues holding Mastech back and made the necessary changes, he was able to switch his focus to what would make the company grow.
“It’s often easy to figure out which things you need to stop,” Horner says. “It’s much harder to figure out what you need to start.”
What became clear to Horner in the first 10 days was not only did Mastech have places in the company where the cost side of the business far outweighed the revenue side, which he quickly took care of, it also had pieces of the business that were growing significantly, but were cash starved because of unprofitable activity.
“When we stopped doing those unprofitable things we were able to divert the money into the side of our business that was growing,” he says.
“Our issue was fundamental — we had job requisitions for that talent that in the past we weren’t even working, let alone filling. Our initial conclusion was we had a capacity problem. We needed to add more capable people to our talent search and recruiting function.”
Within Horner’s first 13 months, the company more than doubled the size of its recruiting organization.
“We doubled the capacity for finding talent and linking it to new job opportunities and that’s how we grew. We also committed to investing in training and development for that new recruiting talent.”
Compared to its public peers Mastech has grown relatively quickly. There is only one public peer that has grown faster than Mastech in either 2012 or to date in 2013 and it’s a company that did a large-scale acquisition.
“We’re growing at one and a half or two times our public peers,” Horner says.
Now that Mastech is firing on all cylinders, Horner has to make sure the growth is sustainable, which starts with ensuring demand for IT talent continues with the company’s clients.
“You have to continually build relationships with your customers and you have to continually ensure that the demand side of that equation is there and will be there,” he says. “For us, it becomes consultant-centric really quickly. It becomes building relationships with the consultants and helping a consultant believe in the fact that Mastech is going to be a good option for their next job and their next five jobs after that so I can help them grow their career and grow their skill base.”
How to reach: Mastech, (412) 787-2100 or www.mastech.com
As a new CEO, understand what you know
and don’t know.
Analyze your business to uncover any problems.
Focus on business areas that are growing or have growth potential.
The Horner File
D. Kevin Horner
President and CEO
Born: Pittsburgh, Pa.
Education: Attended Saint Francis University in Loretto, Pa. Majored in math and computer science with a business minor.
What was one of the first jobs you had and what did you take away from that experience?
I worked at a paint store. I learned that the customer is always right.
What is the best business advice you’ve received?
If you take care of the customer, the customer will take care of you.
What do you miss about being a CIO and what do you enjoy about being a CEO?
I am loving the opportunity to run a business and I’m loving the type of business that we are in, because we put people to work every day. I do miss some of the scale in my previous role. Moving from a $25 billion entity that’s got name recognition everywhere in the world to a $100 million company has its differences that I miss.
If you could speak with anyone from the past or present, with whom would you speak with?
I would love to sit down with Winston Churchill and Franklin Roosevelt. To see the world through their eyes in the time that they lived in it would be really cool. Also, I’m a Pittsburgh kid, so I would love to sit down and talk to former Pirates right fielder, Roberto Clemente.