Staying Private ‘Until Armageddon’
The story of how Turtle & Hughes is staying private but embracing outside board members
How and why one of the largest electrical distributors in the country introduced independent directors to its board was the topic that engaged the Private Company Governance Summit 2016 attendees as a luncheon keynote during the full day of presentations on Thursday, May 12.
The company under examination was Turtle & Hughes Inc., a family business that also has the distinction of being one of the largest women-owned companies, not only in the New York area, where the company is based, but, indeed, in the United States. It supplies products and services to buildings all over the world, including the new Freedom Tower in lower Manhattan and, in a fun fact shared with the PCGS crowd, Turtle & Hughes has been lighting the Rockefeller Center Christmas Tree since 1936.
Jayne Millard is chief executive officer of Turtle & Hughes. Her great grandfather founded the company in 1923 but it was her great grandmother who ran it for 45 years — “with an iron fist,” Millard said. “I am happy to say that I came from a very strong gene pool that has served me well in my life.” The company’s fourth-generation CEO took the reins from her mother about seven years ago. Its revenues were $300 million then and are now at the $600 million level.
Millard took center stage at the PCGS program when she was interviewed by Julia Klein, another accomplished woman CEO of a private company, C.H. Briggs Co., a distributor of specialty building products headquartered in Reading, Pa. Rounding out the discussion of how Turtle & Hughes opened up its board to outsiders was Kathryn Swintek, a former investment banker who is now a managing partner with the Golden Seeds organization, which specializes in funding early stage women-owned and managed companies. Swintek was one of the early outsiders selected for the Turtle & Hughes board.
Julia Klein began at the beginning, asking Millard when the company first started thinking about adding outsiders to the board. “About 15 years ago,” Millard answered. It was her father, she says, whose concern was “to see the company succeed to the next generation and beyond” who began to “think about removing himself and other family members from the board and adding external board members.” (Her mother put it more expressively when she indicted her wish for Turtle & Hughes to be privately held “until Armageddon.”)
Millard explained that Turtle & Hughes is more complex than simply being a distributer. It has three separate operating divisions: the traditional distribution/engineering business, a consulting company, and what she described as a “supply chain” company. “All have very different business models, with a certain amount of complexity and requiring their own level of expertise from the board,” she noted. She said she is heartened to have “a dynamic talent pool” of board members to draw from for guidance in leading these multiple operations.
When Klein turned to Swintek to ask what attracted her to consider joining the Turtle & Hughes board, it was the company’s three business lines that were seen as an opportunity to have an impact. Coming out of a large corporate background as she did, Swintek admited that “there is a tendency for people to operate in silos.” She said she saw a compelling chance to help Millard and the leadership team “drive forward the conversation about integration” and help foster “more sharing, trust, and participation” across the operating units. Swintek put emphasis on “the leverage you can get — one plus one equaling five, never mind two!”
Of course, also essential to Swintek’s decision to join the board were the talent and character of Jayne Millard and her leadership team. “When I met the other board members and the executive team I could feel a high integrity and commitment to excellence, which is very important to me,” Swintek said. “The company had a long and successful history. I could feel that Jayne had a real passion to carry on the family business and take it to the generations beyond.” Swintek admitted to a personal appeal to Turtle & Hughes: “Because I do have a strong and genuine interest in diversity and leadership, the generations of female leaders at the company resonated with me. We often talk about women taking on the tough assignments — Jayne’s great grandmother ran the business during the Great Depression.”
Sourcing new board members is always a challenge, and can be a fraught endeavor if you don’t get it right. Klein rightly sensed that the audience wanted to know how Millard and Swintek met. The answer was straight out of an old school governance manual — networking. “It was through a women’s leadership network that I was introduced to Kathryn,” Millard says.
“I asked Kathryn to join my board because I knew I needed more women in the room,” Millard stated. “I do believe that women can add tremendous value.” Swintek is one of two women on the six-member Turtle & Hughes board. Millard is happy with that gender diversity at the board level but she would like to see greater gender parity in the company’s executive ranks. “It is a very male dominated industry we operate in,” she explained. “We have a challenge. We are constantly sourcing a very specific type of employee — one with an electrical engineering background. We have strong push to source female candidates, and are getting better at it.”
Millard highlighted several of the other board members: “a gentleman who owns a successful engineering company, an attorney who also is an ex-governor of New Jersey, and an energy/utility person,” noting that “everyone brings an expertise to the table.” Pressed again by Klein on how the board influences her leadership of the company, Millard said, “They certainly influence my strategy. A lot of our conversations revolve around sales. We’re a very sales-driven culture. All of my board members put salesmen’s hats on at one point or another. We tend to have a dynamic dialogue about how we grow the business, how we manage that growth — which can be challenging — and how we want to diversify the business.”
Swintek chimed in that since she has been on the board the company has made three acquisitions, adding, “That’s been a big part of the deliberations in the boardroom — assessing the strategic value in making these acquisitions and then the post-acquisition integration plans, both what was intended to be and how the integration is being carried forward.” From her board member’s perspective in looking at future in-demand skill sets for the Turtle & Hughes board, Swintek identified two areas of expertise that will become “increasingly valuable”: “firsthand experience with cutting-edge human resource policy” and “more hardcore technology experience and skills.”
In wrapping up the discussion, Klein addressed a subject that is a crucial duty of any CEO and board member — ensuring succession. It was a subject much on Millard’s mind. None of the fifth-generation family members “are fully baked yet and won’t be for probably another decade or so,” she explained. What that means for Turtle & Hughes is that for the first time in the company’s 93-year history it may have a non-family professional manager at the helm. “The question then becomes, how do we preserve the family business culture, heritage, legacy, and core values of the family and the company?” Millard asked. “That’s my next challenge.” A challenge for which she will undoubtedly be gratified to turn to a board of outside experts to help her navigate.