Becoming an ESOP: Empowering Employees through Ownership

Alana Muller 0:09
Welcome to Enterprise.ing, a podcast from Enterprise Bank & Trust that's empowering business leaders one conversation at a time. We'll hear from different business leaders about how they found success in cultivating their professional networks and keeping them healthy and strong. I'm your host Alana Muller, an entrepreneurial executive leader whose primary focus is to connect, inspire and empower community. We at Enterprise Bank & Trust thank you for tuning in to another episode.

Alana Muller 0:40
Hello listeners, welcome back to Enterprise.ing podcast. Musselman & Hall Contractors is a 110- year-old organization providing railroad, concrete, asphalt and decorative concrete services throughout the United States. A company that values its long-term customer relationships over short-term profits, Musselman & Hall is one of the longest standing general contractors in the Midwest and prides itself not only on building communities in which it operates, but also establishing meaningful long-term relationships for more than a century. With that, it's my privilege to welcome Dexter Phillips and Kyle Van Slyke to Enterprise.ing podcast. Not only are they Musselman & Hall's CEO and COO respectively, but they are also my friends. Dexter and Kyle, welcome to Enterprise.ing podcast.

Dexter Phillips 1:25
Thanks for having us.

Alana Muller 1:26
Great to see you both. To start our conversation, I know that both of you started at Musselman & Hall as laborers and worked your way up through the ranks of the organization to lead it today. Dexter, tell us about your career journey with the company and how you and Kyle came to work with one another?

Dexter Phillips 1:41
Well, I'll start by saying, yeah, we started in the field. I think Kyle and I were both in college working as summer jobs. I chose to work here instead of working at Kentucky Fried Chicken for the summer. So that was a fun, more lucrative opportunity. I got started in the field, graduated from KU, moved into the office. I think in 2004, I moved into a role where we started our decorative, our specialty concrete operation. And as part of that, Kyle hadn't moved into the office, and I hired him as my, basically my lead policy foreman for concrete.

Alana Muller 2:20
How cool.

Dexter Phillips 2:20
So, fast forward a couple more years, Kyle moved into the office, I moved... I think in 2010, I moved... started managing our asphalt operation and then moved from there to Executive Vice President and CEO. So, people kind of joke because I've done all the jobs here at one time or another. So, that's really kind of a strength.

Alana Muller 2:41
Well, that's so cool. So you really got to see every facet of the business. Kyle, how about you? What would you add to that? Did you have a similar kind of journey?

Kyle Van Slyke 2:48
Absolutely. Dexter is kind of like my big brother. I kind of chased him for almost three decades now. So I was... started as a laborer while I was going to school. And one thing I would add is, when I got out of school in 2002, Musselman & Hall was really trying to capitalize on some opportunities of growth, and that was decorative concrete. And I was really enjoying my time, learning a lot. I really was excited about the future, so I thought I'd give it a shot and see what would come of this. And so, really, I just kind of followed Dexter's footsteps in building and decorative concrete, which led to some opportunities to come into the office and jump into estimating and project management. And Dexter and I just kind of kept working our way up the ranks to currently running the company. Yeah, it was a fun journey, we learned a lot, but I think Dexter would agree with me... That journey of starting at the bottom was, you know, really integral in our success. Just having had all the positions, know what our guys are doing and be able to carry that into each position as we moved up has really helped a lot. So...

Alana Muller 4:04
Well, what I think is cool is that you both started when you were in college. Have you kind of kept that tradition with others that you bring into the business? Are you recruiting off of college campuses today?

Kyle Van Slyke 4:14
We are. We talk about this a lot. It's really shifted towards recruitment towards office positions. And that's something that we really wrestle with a lot because a lot of the college students don't want to get the field experience anymore. So, they want to go right into the office job with a computer and all those types of things. So... and we found some really good people, but we really kind of wrestle with going back a little further like Dexter and I's journey because it really rounds out the individual to get the experience for future success and when you skip that, they don't really want to go back to that, so we're trying to get... it's really more recruiting freshman, sophomores to jump in and get that experience in the field that's really just valuable for their future career. So...

Kyle Van Slyke 4:18
If I could add on to that, so essentially, college kids don't want to do the field work. And then, honestly, our guys that do start in the field, they don't want the pay cut to move into the office. Right?

Alana Muller 5:21
Yeah.

Dexter Phillips 5:21
The craft work is... it pays well versus the entry-level office position.

Alana Muller 5:27
Yeah.

Dexter Phillips 5:27
So, it's hard to balance those two, for sure.

Alana Muller 5:30
Well, so kind of keying off of that, I want to maybe take a step back. Dexter, you talked about all the different roles that you play in all the different types of components to the job that you have the opportunity to experience. Take us back a little bit, I want to know a little bit more about Musselman & Hall's primary business line and what sets it apart in the marketplace?

Dexter Phillips 5:49
So, if I were to take it back, our roots are in heavy highway. So, we're 110 years old, you know, everything from roads and bridges to the original streetcars that were rolling around Kansas City, way back before I was ever around. So, you'd see a transition there from... And it really kind of started with our decorative business in 2002-3, where we started getting into more building work that was just natural, when we started to do more specialty concrete work just to get into more building work. And then, as we continued to grow, we kind of expanded our horizons. You know, kind of a culture of essentially solving our customers’ problems. So, you know, a lot of times that required an asphalt solution, or might require some utility or grading work. So, we kind of expanded our scope of services, just basically trying to answer the problems that our customers have. So, I think you're introduced us as a general contractor, I think we're certainly not building buildings from scratch. But, we are a site general contractor to this day, just basically, because we wanted to provide all the solutions to our customers.

Alana Muller 7:02
Yeah, well, and you and I have talked before about not just providing solutions to your customers, but really knowing and getting to know your customers and how that has helped your business grow. Can you share a little bit more about how you've been able to build relationships in the marketplace and how they keep coming back to you year after year?

Dexter Phillips 7:19
You know, for me, I think our relationships with our customers are... you'll hear me talk a lot in the office about “win wins,” where like, I don't really feel like we're just a one-sided partner with our customer. Like we're actually... we provide, you know, whether it's expertise, technical knowledge, estimates, budgets, that sort of thing on the front end, or providing quality work there on the back end. Either way, I think our customers are seeing value in what we're bringing to them. And it's a little frustrating, because we'll do a job that's $5,000, or we'll do a job that’s $5 million. And it's hard to manage both of those sizes, but when you're taking care of your customers’ problems, that's just kind of what happens.

Alana Muller 8:01
Yeah, well makes sense, makes sense. Well, that leads me to kind of switch gears a little bit. Kyle, you and I have talked a little bit about that much of what drives Musselman & Hall are its core values, and a wish to have a positive impact on the communities that the organization serves, especially in Kansas City and St. Louis, where I know the bulk of your work is. Share a little bit about how the company engages with the community and how those values really come to fruition.

Kyle Van Slyke 8:27
I think it really just starts with 110 years in our region is a big deal. And so when Dexter and I look at the organization, and you can look at the... all the different projects we've built, the impact that we have, we take a lot of pride in that. But when you start to kind of really build it all together, it's really building the community and helping grow it into the future. And we really take a lot of pride in saying, "We need to continue that." So, when we move forward into the next 100 years, we don't want to lose that piece of the organization that is helping build the future. Whether it's the industrial side where there's products being made, you know, Kansas City's seeing a moment where there's a lot of growth, and a lot of that's revolved around just manufacturing and industrial. And we play a piece in that. And we think that's really exciting to be a part of.

Kyle Van Slyke 9:33
And so, when we start looking at what we're doing and building from a construction standpoint, you know, there's the community side of what that’s serving that's important to us, too. And so, you know, that's one of the reasons why I really wanted to become an ESOP is the employees, the families that are a part of our organization, but also, those people that go out into their communities and where they live like we want to, we want to make a difference. And so we just strive to always look at growing and impacting just from different charities. Charities that really mean something to people in our organization. So, we have a lot of veterans that work for Musselman & Hall. And we want to support different organizations like Veterans Community Project that serve both our employees, but also communities in our areas. And, you know, we really feel like we're building projects that are making a difference and moving us into the future. But, we also want to build the communities that they're serving as well. So...

Alana Muller 10:37
I love that. And what strategies do you use? Or, in what ways are you able to engage your employees in that effort? Do you hear from them? Do they approach you? Is it proactive or reactive? And I'm imagining that they really embrace this opportunity. But, how do you get them on board with this notion?

Kyle Van Slyke 10:53
Well, some of it is organic. We have some highly passionate employees that we want to support. And so they'll bring ideas to us that we'll unpack and we have a committee that we try to take in these ideas and support the employees. Because the number one thing we want to do is... This being of value to us... we don't want to say no a lot, but we can't say yes to everything. So we just want them to be heard. And we also look to our committee to look into these organizations and make sure that they really kind of live and breathe what we are trying to impact as an organization. And then, you know, we're always open for new opportunities.

Kyle Van Slyke 11:37
So strategically, we're going out and we're trying to see where things make a difference. One of the things that we're passionate about is workforce development. So, Dexter and I shared about how we started in the field, and so there is a piece of giving that opportunity to others in the community to start a career here. But, a lot of them don't really get the opportunities depending on where they live or their school district. And so, we really feel like it's important for us to go out and reach out to those organizations and try and partner with them to try to make an impact in kind of building the next generation, giving them opportunities to fall along the lines that Dexter and I had.

Alana Muller 12:22
That's really nice. Well, Kyle, you mentioned the fact that the company is an ESOP. And Dexter, I know that in the last few years Musselman & Hall in fact has gone from being a family-owned company to now being employee-owned. That's the ESOP. Can you talk about that? What it means, the steps you took to get there and the impact it's had on the workforce?

Dexter Phillips 12:41
Yeah, that's a loaded question.

Alana Muller 12:45
Fully loaded question.

Dexter Phillips 12:46
All right. So, I can try to just share the story of basically our motivations to become an ESOP. And now we became an ESOP in 2018. And, you know, we were, I guess you could say, it's kind of somewhat family-owned. We were owned by basically three different families at that point. The issue was in 2016 and 17, when all this was happening, like we were all different stages of life, right? So, you've got... you've got somebody that was in their 70s, somebody in their lower 60s, and then you had myself. I was in my mid-40s. And when you do that, like we all had different needs and desires of what we wanted out of the organization.

Dexter Phillips 13:29
And they basically, the plan was for me to buy them out. You know, I was the succession plan. And, you know, I think the company grew at a point where I realized that by the time I was able to complete that purchase, and be the succession, that I would have to figure out how to sell it. And so for me, it didn't really make a whole lot of sense to, you know, just kind of bluntly, like, use all available resources, I had to buy the thing as fast as I could just so I could sell it when I was 60. I'd rather just not go through that whole process, that'd be a headache. And the other two individuals, they needed a way to get their money out of the organization as well. And the organization needed it because we didn't really have a great succession plan.

Dexter Phillips 14:14
You know family organizations, I think that's one of the things they struggle with is continuity from one generation to the next. Anyway, we all had, we all came into it with different needs and wants. And you know, I kind of suggested the ESOP answer as a way to solve my problem. But it was also a way to allow the other two owners, to allow them an exit strategy. It also created a board that solved our succession plan and it also put the company in the hands of the people that basically are getting the work done. So, you know, it's really fun to work for a… an ESOP, because you're not trying to make money for somebody else. You're trying to make money for the employees there. So, every single conversation, every little bit, even the hard ones that you have, they know you're doing it for the right reasons. And it's completely changed the culture of the organization, like nobody can say that we're doing anything for any other thing just for the, for the sake of the employee stockholders of this organization.

Alana Muller 15:12
Yeah, that's amazing. I mean, when you both talk about sort of the community, the way that you engage with clients, the way that you want the workforce to feel proud and excited about the work they do, I think that it just sounds like the ESOP was a win-win-win for everyone involved. So, not only the previously established shareholders, but also ultimately the clientele, because you've got a workforce that is happy and pleased to come to work in the morning and work hard to... for the benefit and success of the company.

Dexter Phillips 15:43
Yeah, you know, it's funny because ESOP is kind of a... I think there's only three or four hundred ESOPs total in the entire country. And so it's a pretty close knit group, and you start, but you start getting to know them once you kind of get into the club. And they're all great organizations who have people that just plain... just do things the right way.

Alana Muller 16:04
Yeah.

Dexter Phillips 16:04
You know, you don't see nearly as much, kind of, self-serving kind of behavior that you can sometimes see, and especially in the construction industry, that you'll find sometimes.

Alana Muller 16:14
Yeah, I mean, it's like the... you're creating value. It's a co-op, essentially, right? It's a co-op with a stock plan. It sounds like just a really cool deal. So, I applaud you guys for pursuing that. So one of the things I wanted to ask about is, so what's next? So you've got some really cool projects going on, you have now converted to this ESOP. Kyle, will you talk a little bit about something the two of you are working on or that the company is working on now that you're especially excited about?

Kyle Van Slyke 16:42
Absolutely. So, the first thing that's exciting that's coming up is in one month, we're gonna celebrate our first wave of employees that are 100 percent vested. So, we're really excited about that. We're going to do our best to celebrate that, because it has been a journey for our employees, as excited as they are about the ESOP, there's just a lot that they don't know. So, myself included. First thing I did when Dexter told me about this back in 2016-17, I started Googling ESOPs because I didn't know what they were.

Kyle Van Slyke 17:20
So, there's a lot of education and, you know, just really intentional conversations and communications with our employees to help them understand the true impact of the organization they're a part of, because we want them to feel empowered to really take this company that they truly own and make a difference with it. So I'd say, currently, our celebrating our 100 percent vested employees, which includes Dexter and I. We survived the first five years and reached that milestone. So, we want to celebrate that and we also want to continue the education so that we can continue the momentum of letting our employees know just what a great opportunity they have in this organization, and what we want them to keep building on.

Alana Muller 18:14
Very good, that sounds exciting, Dexter, is there anything you want to add to that?

Dexter Phillips 18:19
Just basic kind of go in a different direction there… You know, as an ESOP, what's next for us is, frankly, growth. You kind of have a, you know, it's like any other company. You've got a stock, that stock needs to continue to increase in value, you got to figure out a way to make that happen. That can happen by reducing debt, or it can happen by growing profits. So, you know, we are constantly looking to see how we're going to do that, because we have a responsibility to do so.

Alana Muller 18:48
Sure. That makes sense. I want to broaden the conversation a little bit, kind of leveraging what you just shared. I'd love to hear from each of you. What's the best piece of professional advice that you've received, whether from a mentor or anyone else? Kyle, you want to start?

Kyle Van Slyke 19:02
That is a big question. I feel like there's so many paths I go down with that question. I think the thing that first comes to mind is just investing in myself. So, one thing that I've really enjoyed, as you know, just really having good leaders like Dexter and our former owners that I went to all the time and, as we've grown, you know, Dexter and I have become those leaders. And so, we have a large organization, we have a growing organization, and I know that to support the team, and the individuals, I need to invest in myself. So, you know, that's looking at doing different things like kind of having some people in my corner, some professional advisors that I need to be as good of a growing and successful leader as I can. So, you know, those are the things that I'm doing right now with some executive coaches that are helping me see my blind spots, helping me grow so that I can ultimately give that back to our employees and our customers and our growing organization.

Alana Muller 20:13
It's great, very cool. Dexter, how about you? What's the best piece of professional advice that you've received?

Dexter Phillips 20:18
That was a little hard to think of. But from my standpoint… and it came from a board member after we became an ESOP. And, essentially, I understood what fiduciary duty was. Like I knew the definition, but I didn't really know what it really meant. And, in the end, this individual, he said basically, "You need to make what's the best decision for the organization with every decision that you make." And, you know, that sounded really simple. Basically, really simple advice. But, when you think about all the things that muddy up the decisions that we make, from day to day, and you just get it down to that simple of an item, where you just say, "Hey, what is the best thing for the organization?" It's just shocking to me the number of times that the right answer just pops out, like...

Alana Muller 21:10
Yeah.

Dexter Phillips 21:10
You might be struggling with the decision, and you go, "What's the best thing for the organization?" And when you do that every single time it feels like, "Oh, no, there's usually a pretty clear answer to what the best decision is.” Everything else is just kind of distractions to that. So, I don't know if I could ever do it. I know, this isn't an ESOP podcast. But I don't know if I could ever be a leader of a non-ESOP at this point. Because it would be hard to be making decisions that weren't for the employee shareholders, because it's really, really easy when you decide that's who you're supposed to be making the best decision for.

Alana Muller 21:44
Yeah, I love that. I mean, you know, what it does is that everything else just kind of falls away, right? And it's not... Obviously, nothing's ever quite that simple. But, it does sort of give you some laser focus that you might not otherwise have had, doesn't it?

Dexter Phillips 21:57
Yeah, Kyle and I, we both try to make our decisions based on that. And our decisions don't always line up. So, it might not be as simple as I think, but we certainly align on a lot of them.

Alana Muller 22:07
That's really great. There's one question I ask every guest, and I'm gonna ask both of you. And it's the way that I like to wrap up the podcast and it's this question: If you could meet one person for a cup of coffee, living, not living, fictional or nonfictional, who would it be and why? Dex, you want to start?

Dexter Phillips 22:25
I'd love to meet John Green.

Alana Muller 22:26
Talk about that.

Dexter Phillips 22:28
You know, he's the... I guess... they call him a "young adult author." Is that really what he does?

Alana Muller 22:34
Probably.

Dexter Phillips 22:36
He's just, he's an internet personality, he writes novels. But anyway, he's got some podcasts, things like that I listen to all the time. And, you know, bluntly, like, he battles with a lot of different things in his life, he battles with some mental illness. But, he's always really honest about what's going on in his head and what he thinks. And he's a guy that is shockingly impactful in the world. But he uses that influence to do positive things in the world. So, there's certainly people that are impactful on this world, but they don't necessarily use it for positive reasons.

Alana Muller 23:11
That is so true.

Dexter Phillips 23:13
How people have that power and impact people positively is just something that I really admire.

Alana Muller 23:19
I love that. That is so fabulous. Well, and I mean, it just shows you that there's a lot of alignment with the various parts of our lives, right? It doesn't have to specifically be about business that we can gain inspiration from so many different places. So that's a really nice one. So thanks for that. Kyle, how about you? Who do you have coffee with?

Kyle Van Slyke 23:37
Well, mine's a little more personal and fun. Mine would be Alex Honnold. Do you know who that is?

Alana Muller 23:46
Who's that?

Kyle Van Slyke 23:47
So Alex Honnold... So the backstory is, so, I love the mountains, I love nature. Like, if I could have a job doing that type of stuff, I would 100 percent be doing it. Which I know there are some out there, but it's just my happy place. And so Alex Honnold is a mountain climber. And what intrigues me is, because I love the mountains, I see him climbing these mountains with just this like sense of fearlessness, but he's also not like just this crazy risk-taker either. So, he's very methodical, he's strategic, he's disciplined. He's famous for a movie, "Free Solo," which you should watch, if you haven't seen it. And so he climbs El Capitan in Yosemite without ropes. But he like... you know, the backstory is everyone thinks he's kind of crazy, which I think he is a little bit, but I think it's so cool where, you know, he like spent two and a half years perfecting his ability to do this route, and overcome his fear to where... Like the fear went away and now he just went to execute. And it's got the nature, mountain tie-ins that I think... I would just love to pick his brain a little bit and see what he's got to want to say over some coffee sometime.

Alana Muller 25:10
Love that. That sounds super fun. Super fun. Well, it's been great for me to have both of you on the program. I love seeing you and love hearing your perspectives. So, Dexter Phillips and Kyle Van Slyke, where can our listeners go to learn more about the two of you and about Musselman & Hall Contractors?

Dexter Phillips 25:28
Of course, you can always go to our website, www.MusselmanAndHall.com. I don't know if you want me to spell that out. M-U-S-S-E-L-M-A-N-A-N-D-H-A-L-L.com. And then also just by calling us.

Alana Muller 25:42
Fabulous, that's great. Well, it's been great having you on the program. Thanks so much.

Kyle Van Slyke 25:47
Thank you.

Dexter Phillips 25:49
Good to see you.

Alana Muller 25:52
Thanks for joining us this week on Enterprise.ing. Be sure to visit our website, enterprisebank.com/podcast, to subscribe so you'll never miss an episode. If you found value in today's program, please consider leaving a review on Apple Podcasts or telling a friend about us. Enterprise.ing: powering business leaders, one conversation at a time.

Alana Muller 26:16
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