ProBuild CEO Paul Hylbert was clear about one thing before agreeing to this story: He wouldn't sit for any photo showing him with a bunch of central office executives in a boardroom.
That's not what ProBuild is about, he stressed. When ProSales came to Denver to profile the company's management team and ProBuild's evolution into a single unit, he wanted management to be photographed amid workers of all types. And while that's what he got, there's still no question about who stands out.
In a sense, Hylbert's desire to promote a bigger team reflects ProBuild management's multiyear effort to build an LBM operation in which decisions get made at lots of levels throughout the 13,000-person company.
With just 200 employees, ProBuild's headquarters operation in a plain office building along Interstate 25 is small for a central office; 84 Lumber, by comparison, is half ProBuild's size but has 150 more at HQ. But while the authority at ProBuild seems to be diffuse, make no mistake that there is a central team within the overall team at ProBuild that ultimately calls the shots. And what it's doing is nothing less than constructing a 21st-century LBM operation.
There are lots of reasons why ProBuild is practically unique among America's construction supply companies. In an industry where most operations struggle to top $10 million in sales from a handful of branches, ProBuild took in $4.4 billion last year from 505 locations (since cut to about 470) stretching across 5,500 miles, from South Florida to Alaska's North Slope. It buys 90% of its materials directly from manufacturers, sells everything from steel framing to doorknobs, and manufactures or installs virtually every part of a house. Its management team includes several people who have never sold a housing package, but who do have skills befitting what Forbes magazine ranks as the 70th biggest private company in the country.
At its heart, though, ProBuild is still a lumberyard, striving to build relations with pro builders, fretting over 2x4 prices and housing starts, and struggling with questions about strategy. Despite its size, it still has just a 4% market share, by Hylbert's count.
Until recently, ProBuild also has been less a unified company than a patchwork quilt of more than 50 LBM operations stitched together over the past decade. That has led to lots of struggles over who should control what. CFO Tom Ryan put it best: "The core friction we have in this company is, how do you maintain the entrepreneurship that helped these companies get where they are ...and also get the synergistic values from putting the pieces together?"
It's only now, following a combination of sometimes painful organizational and technological changes, that ProBuild is emerging as a unified company. Here's a snapshot of where things stand in six different areas, as explained by the men in charge of those sectors.
Paul Hylbert: On a Fast Break
If the leader sets the tone for a company, it's easy to take inspiration from a 64-year-old CEO who suits up at 6 a.m. Fridays for a full-court basketball game with fellow ProBuild staffers. You can draw conclusions as well from the no-frills headquarters that Hylbert helped pick: Two floors of rented space whose best view is of an enormous prairie dog village in the adjacent lot.
Like those prairie dogs, ProBuild's central staff has spent much of its time out of the public eye, creating the connections needed to link the far-flung company as well as working out the social structure and corporate priorities. While other dealer execs can focus almost exclusively on strategy and markets, Hylbert says ProBuild's key managers have had to carve out time working on "decision rights"–basically, determining which issues are to be handled at the top and which go further down the chain. "We try to push as many decisions as possible to a lower level," he says.
Issues involving customers and money have produced some of the biggest headaches. Hylbert notes that units used different standards to apply cash to customer accounts receivables. This made it impossible to analyze results across groups, so folks in Denver decided ProBuild needed to standardize rules on the aging of receivables." It did that by assembling the company's credit management experts from across the country and telling them to come up with a single system.
"We literally had to lock them in a room and tell them to agree on one," Hylbert says.
This is a change of style for Hylbert, who spent 21 years at Wickes Corp., nine years running PrimeSource, and five years directing Lanoga, which with the Strober Organization's entities makes up much of what is ProBuild today. Wickes' CEO, the late E.L. McNeely, pushed the company into not just retailing but also manufacturing and distributing. Wickes eventually failed, and ProBuild's predecessors ended up buying more than 60 of Wickes' stores. Hylbert says that taught him the value of focusing on what you can do well. At Lanoga, the emphasis was on local control. Hylbert's central office staff could practically fit in a dining room, and each of the company's units not only kept their own names but also did their own buying, set their own policies, and bought their own software. "We tried to keep what worked well," Hylbert says of those times.
By comparison, Hylbert's current bosses–Devonshire Investors, a unit of Boston-based Fidelity Investments–are far bigger fans of at least some centralization, particularly when reaching out to production builders operating nationally. As a result, ProBuild is becoming much more of a single unit, with a common logo to be used at most branches (Spenard, an Alaska institution, is an exception), a common computer platform, standardization of some activities, and the start of "shared services"–ProBuild's euphemism for duties reserved for headquarters.
The central cast started tentatively, making use of the ProBuild logo an option at first and calling a meeting for 700 last year in which it hammered home the theme "The Power of 1." Since then, the pace has picked up, partly because more has been accomplished and partly because the housing crash led to a sense of urgency to put efficiencies into effect now.
"What surprised me was how quickly our field people left legacies behind and became part of one family," says Hylbert, who estimates he's on the road 50% of the year. One time he went to a yard in Colorado with a board member and discovered the manager had changed the store's sign without telling anyone. "Some people were just ready for a change."
And starting this spring, change is definitely in store.