Michael Burrow has changed, but not as much as you might think after going through a very difficult stretch at Burrow Global LLC.
In the second quarter of 2013, an internal audit process revealed a multimillion-dollar case of fraud and theft that had occurred in the construction division of the engineering, procurement and construction company.
“One of my strengths is I trust people too much and my biggest weakness is I trust people too much,” says Burrow, the company’s chairman and CEO. “You can’t operate a business without trust. But after what happened, we went to the Ronald Reagan plan: Trust, but verify.”
Burrow Global was named the No. 1 fastest growing company in the Houston Business Journal in 2013 and the sky was the limit for continued growth. Unfortunately, the 669-employee company’s fortunes were about to turn completely upside down.
“We were putting a new accounting system in and we had put it in all our engineering groups and we were about to put it in the group that had the problem,” Burrow says. “They came to me and said, ‘Give us three months before you do this because billing is way behind and it’s going to hurt cash flow.’ That turned out to be a scam. They were just trying to buy three more months to cover it up.”
Burrow had been through a tough situation 17 years earlier that gave him a good start in dealing with this new financial crisis. And believe it or not, within six weeks, despite some very difficult actions that had to be taken, the company was back on its feet.
“The first time I had to do one of these, I had to feel my way along,” Burrow says. “We got it done in record time and our bankers were extremely happy. You just don’t let yourself panic. You focus on the task at hand and what needs to be done and you jump in and do it.”
Here’s a look at what Burrow has learned from difficult situations and how he manages to keep his cool under pressure.
Get your point person
The first thing Burrow did to address the problem in his company was appoint one individual to take the lead on coordinating the turnaround. Burrow was still the CEO, but Gary Knight, who now serves as president of Burrow Global Construction, would manage the day-to-day needs of the crisis.
“I told him we’re not going to have a lot of committee decisions and we’re not going to second guess you,” Burrow says. “We’re not going to come behind you and say you shouldn’t have made that decision.”
Burrow says there often is temptation to do just that when stress levels are high and it feels like everything needs to happen yesterday.
“I had been through it personally before, being in his position,” Burrow says. “So I said we’re going to make mistakes, but I’m not going to criticize it because I understand where he’s at. He has to take the ball, run with it and get it fixed.”
There were some tough calls that had to be made. A total of 46 employees were laid off right away and the construction company was downsized from 700 people to as few as 220. Burrow himself borrowed $5 million from the bank to make sure he had suitable cash flow to get through the situation.
“You get stretched out,” Burrow says. “You are starting up as an entrepreneur and you put it all out there and that’s how I felt for a while. I had people saying, ‘You should just file for bankruptcy.’ I said that wasn’t in my vocabulary. I never think about that.”
The key to ably managing through those difficult decisions was having Knight in place as his point person on the turnaround effort.
“I knew he could make hard decisions and switch to a construction mentality, which means sometimes you have to be a little tougher or a lot tougher, in some cases,” Burrow says. “Sometimes, you just instinctively know this is the right guy to do this.”
One thing you want to look for in a leader for this type of job is decisiveness.
“A lot of people will study something to death and they’ll be afraid to make a decision,” Burrow says. “You could see that Gary didn’t have that fear. He said, ‘OK, we’re going to do this. This is how we’re going to do it.’”
Take care of yourself
All this is not to say that Burrow himself was able to completely avoid moments when the pressure got to him.
“I was in a store one day and I decided to check my blood pressure,” Burrow says. “It was 230 over 130. So I went home and took some blood pressure medicine and got it back under control. Now that it’s all behind us, I’m completely off the blood pressure medicine and I’m 109 over 60-something without taking any medicine at all. I had no idea it was having that kind of impact on me. It’s like a complete turnaround for the company financially, but also for me personally.”
The pressure is intense when it feels like the sky is falling and you may not even realize how much it is getting to you.
“The toughest thing for me from the standpoint of emotional strain would be the 46 people we laid off right off the bat,” Burrow says. “Some of those people deserved it and some didn’t deserve it. We had to make that move and make it in a hurry. It affects people and their families. We grieved over that quite a bit.”
Another tough point was speaking to new suppliers who were unknowingly made a part of the fraud at the company.
“When these guys got in trouble, they tried to cover it up and one way they did it was they got all sorts of new suppliers on-board, people that did not know us that well and didn’t know whether to trust us or not. It’s a bad feeling when you go to a mom and pop and have to say it’s going to be a while before I pay you. It’s tough on both sides.”
One solution to easing that pressure is finding someone who has been through it before and can offer you useful advice and counsel. Burrow played that role soon after the crisis ended when one of his company’s suppliers came to him facing its own desperate situation.
“They were panicking over a situation that wasn’t half as bad as ours,” Burrow says. “I looked at it and said, ‘This is something you can fix, I hope it helps.’ Try to seek some counsel from someone who has been through it. Get somebody who was successful. I showed the guys the way out. I said all you have to do is get yourself to this number right here and cut this cost and then you’re fixed. You can do this in two or three months and you’ll be back strong again.”
One thing Burrow did during his difficulties was send a personal letter to each of his suppliers asking for patience, but committing to restoring everything they had lost due to the fraud incident.
“I said we’re going to pay everybody 100 cents on the dollar,” Burrow says. “We had a few come back and say just to get our money, we’ll settle for 60 cents on a dollar, or 70, 80 or 90. I turned it down and said, ‘Look, I said I’d pay you 100 cents on the dollar. I’ll pay you 100 cents on the dollar.’”
Burrow worked with a number of different groups and individuals outside his company to deal with the situation, including sub debt lenders who came away quite impressed with his leadership ability.
“Early on, they said to me, ‘You’re going to get through this,’” Burrow says. “And I said why do you say that? They said, ‘We’ve been through this before and most people freeze up. They don’t know what to do, they get depressed and they worry about it. You just grab the water hose and start putting the fire out.’ I would tell anybody in that situation, don’t let yourself get to the point where you freeze up.”
Flip the switch
Burrow says he has changed as a result of what happened in 2013, but not too much.
“It changes you some, but I’ve determined I can’t be a person who doesn’t trust anybody,” Burrow says. “That’s just not my personality. I’m not paranoid, but I am a little more streetwise than I was before. I’ve tried to put better systems in place, more checks and balances and the right auditing firm. And always, trust, but verify.”
If you don’t think that you could get your company through the worst of the worst situations you might face, you may be surprised at what you can handle.
“You can be a person who can grow a company and be a person who can fix it, but you have to flip that switch,” Burrow says. “A lot of folks can’t do it. If you realize you can’t go both ways, seek some wise counsel and maybe even a turnaround specialist. If you’re a person who does not react well to those situations, it may give you a lot more confidence and ability to get it done.” ●
- Put someone in charge of the situation.
- Don’t overdo it.
- Trust, but verify.
The Burrow File
NAME: Michael Burrow
TITLE: chairman and CEO
COMPANY: Burrow Global LLC
Born: Mansfield, Louisiana
Education: Bachelor’s degree, mechanical engineering, Louisiana Tech University.
Who has been the biggest influence on your life? I do have a lot of faith because I am a Christian. So that gives me a lot of faith that things will get turned around. At the same time, I would say there are some partners I had early on who were extremely oriented toward being high-integrity guys. They would always do the right things for the right reasons and I adopted that philosophy.
What was your very first job? In high school, my brother and I wired houses. My brother worked at a telephone company and knew a lot about electrical. I didn’t do a lot of the actual wiring. I cut the holes in the wall and pulled the wires while he did all the electrical work.
What is your favorite vacation spot? I have a lake house on Toledo Bend Lake, right on the Louisiana-Texas border. I grew up in North Louisiana and fished it in college. It was halfway between where we had family members and was a good meeting place for people coming from both directions.