MHI Solutions Improving Supply Chain Performance
Executive Viewpoint
BY , CHAIRPERSON AND EXECUTIVE VICE PRESIDENT, ST. ONGE COMPANY AND MHI PRESIDENT
As an independent engineering logistics consulting firm, MHI member St. Onge is different from many companies in the material handling industry. We don’t produce specific products like conveyors, lift trucks, pallet racking or software. Instead, our people—their capabilities and skills—are our product. Our people truly are our company.
And if the last few years have taught us anything, it’s that the leadership and culture of our company have to reflect the way we value our people. It can’t just be shared with thoughts and words. It requires action.
In the midst of the uncertainty that was 2020, the leadership of St. Onge took a hard line: We weren’t going to let anyone go. There would be no layoffs. And we held to that.
As we came out of that year, work started to pick up, markedly. It wasn’t long before our workforce was overloaded. Good, healthy utilization of our workforce means about 75% of the engineering staff’s time is devoted to project work. We were running an average of more than 83%, and on some weeks, more than 87%. That might not sound like much. But it meant there were a lot of people with no breathing room. We knew that was unsustainable.
Among other services, we provide warehouse and manufacturing plant design and supply chain design, and with the explosive growth in e-commerce, more equipment and more buildings were needed. That drove up our business dramatically. But we couldn’t grow if we couldn’t attract and maintain quality staff. All of our revenue is driven by our people working for our clients. We can’t increase sales by running production lines for an extra shift. We can’t try to increase profitability by buying more raw materials and getting a better price on them. We have to attract more clients to work with us, and we have to have the people to produce quality deliverables on behalf of those clients.
So, in early 2021, we began to aggressively recruit. At the same time, we started informing clients that we couldn’t start every project “next Tuesday.” It would be two months, six weeks, one month, depending on the nature of the project and the complexion of our staff’s workload. We wanted to maintain and push down the utilization of the overall staff. We told the staff we were going to do it, and they said, “Great!…I hope.” And then we did it.
The result was that we attracted and kept great people. And the people we brought in could maintain not only the workflow, but also the quality, as we focused on ensuring training of new associates was ample and allowed for the quality product our clients expected. We were able to reduce our overall utilization and increase our staff, revenue and profitability, all at the same time. Everybody won. It was all about working toward the best interests of our people rather than just for the bottom line. As for that bottom line? As of 2022, we have grown more than 55% in revenue since 2020. Now, 2020 results were suppressed by COVID, but if we look back to 2019, we’ve still grown 40%. At the same time, projects have been moving ahead more smoothly and people—our people—are more comfortable.
Every quarter, we share the trends about growth and utilization and other important information with our employees. We’re now two years into that feedback loop since COVID, and we’re still showing progress. Right now, we’re at about 74% utilization. But we’re also at 125 engineers, up from 100 two years ago. We’re still doing a lot more work as a company, and our staff turnover is below 5%. That culture has become self-fulfilling, with everyone valuing each other, singing from the same sheet of music.
A few examples:
- When someone interviews at St. Onge, we have them meet with people other than just management and HR. We want to introduce them to people who do what they’re going to do. If those people are enamored of the company, what better message could you send to a prospective employee?
- Like many companies, we were grateful to receive a comfortable PPP loan, and it was forgiven. We also received our Employee Retention Credit. With both the PPP and ERC, we shared the funds with everyone, from the partners, to managers, to engineers, accounts and IT support personnel in the form of distributions and bonuses. We received direct feedback on that. Some took the time to email in response to the announcement of the bonuses: “Every time you do something like this, I realize I made the right choice to come work here.” The funds were shared across the company because the whole company is responsible for our success. We have always focused directly on client satisfaction and still do, but now, employee satisfaction is right there next to it. I don’t believe you can have one without the other.
- We listen to and act on feedback, too. The associate input from our participation in the Inc. Best Workplaces survey led us to change our vacation policy. We also added an 11th paid holiday, and we allow people to use their holidays whenever they want. We also decreased the tenure needed to earn four weeks of vacation by five years. It’s nothing earth shattering. And it does cost money. But if that enables us to attract more quality people to come work with us because we gave one more day off, or offer more flexible vacation time sooner, the whole company wins. We end up being more financially robust and organizationally stable.
- In April 2020, when we told the entire company about our plans to not release any staff, it was a huge “say what you do, do what you say” moment. We were fortunate to be able to maintain our staff through COVID, and I’ll be curious to see how we keep that momentum going. But we do know the little things, consistently done, do matter.