Fully Vested

A multiple-award winning remodel by HRI, the home of Iris Harrell and Ann Benson (and Julio) is a showcase of green and universal design.

Credit: John Lee/Aurora Select

This is a longer version of the article that appears in the October 2009 issue of REMODELING. Click here to read more about the Fred Case Remodeling Entrepreneur of the Year Award.

“Secretly, I know that many entrepreneurs are unemployable, but we can make things happen. That’s our weakness and our strength.” —Iris Harrell, Harrell Remodeling Inc., Mountain View, Calif.

Years before she first picked up a hammer, sketched out a bathroom, developed a P&L statement, or realized that she was stunningly good at creating jobs for others, Iris Harrell’s restless curiosity nearly got her fired “so many times,” she says. In hindsight, it was courage. At the time, it was radical.

As a world history teacher in rural Virginia, wanting to better understand the culture in which her students lived, she infiltrated a Ku Klux Klan meeting “in a field somewhere, at night. And I passed!” she says, a realization that was almost as terrifying as the experience itself.

In her next classroom, in nearby yet world-apart inner-city Richmond, she invited speakers from diverse religious backgrounds — Mormon missionaries, an atheist Unitarian minister, a Muslim — “anything to keep the students from jumping out of the windows.” Then onto a Navajo reservation in Arizona, her classroom a bare-bones Hogan and her 7th graders barely able to work at a 4th grade level.

“Teaching was where I got my wide cultural understanding,” Harrell says. It also sparked her talent for finding the best in diverse groups of people, and helped prepare her for just about every adversity an entrepreneur might face, and then some. These range from Silicon Valley’s economic busts and booms (Harrell Remodeling’s revenue growth averaged 19% a year from 1986 until peaking at $11 million in 2007) to the sexism and homophobia that she sees simply as opportunities to educate, elevate, and bring understanding.

“Iris has incredible grit and determination. She just doesn’t give up,” says Michael McCutcheon of McCutcheon Construction, a San Francisco Bay-area peer. Others describe her as “fearless,” “driven by numbers, not emotions,” “decisive,” and “a master salesperson.”

Yet this woman who didn’t discover her calling in remodeling until she was 32, and who built one of the most innovative companies in the industry, is beloved, not resented or feared. “She has lived a life of such quality and passion,” says Greg Stine, CEO of Polaris Marketing, who started working with HRI during the 2001-02 recession. “There were times I got paid to work with Iris and her team and I thought, ‘This is stealing; I should be paying them for teaching me.’”

McDermaid Painting owner Gus Camolinga is a trade contractor to 25 builders but refers clients to Harrell Remodeling alone. “They’re the only company that I trust will deliver a good-quality product,” he says.

“The price is premium, but Iris says what she’s going to do, and does what she says, and the end product is absolutely beautiful and you have no regrets,” says three-time client Victoria Klein.

And HRI chief estimator Kathy Paul, who thinks of her work as “an archeological dig” (intellectual curiosity seems to be in the water), says that her 11 years at HRI are just the start of her career at the place where she fully intends to work until she retires, in part because she owns a stake in the company.

All HRI employees, in fact, are employee-owners. Many others, including trade partners and clients, demonstrate a similarly intense loyalty not only to Harrell, but also to her company’s bottom line. Consider the following practices a starter list of reasons why.

Observe, Learn, Do

“Iris could do it anywhere. In Omaha or Boston or Midland, Texas, she would build a company that represents her core values, treats people well, and figures out what its customers need.” —Greg Stine, Polaris Marketing

She did it in Dallas, in fact. In 1982, seven years after leaving the classroom to tour with a folk-rock band (she played bass and guitar) and, later, to work in the nonprofit arena, she became a licensed contractor. For four years, she and an all-woman carpentry team ran Iris F. Harrell Remodeling.

Well, as with everything in Harrell’s life, the truth is more complex than that. In 1979, while living in Texas, she met Ann Benson, a librarian who “thought if you could read about it, you could do it,” Harrell says. Then with a master’s degree but already bored with her third career, she learned from Benson that she was within reach of two things she had always yearned for: a stable family life and a gratifying career.

Growing up in Virginia, Harrell and her two brothers ping-ponged from town to country, as her father’s itinerant occupations (carpenter, farmer, storekeeper) clashed with her mother’s independence and entrepreneurism. Her mother eventually ran a successful beauty shop, but “when she started making more money than my father, it became an issue.” Her parents divorced in Harrell’s senior year of high school — the sixth school she had attended.

Though she “had never even held a hammer” when she met Benson, the couple began to spend weekends working on their own home, as well as on the rental properties owned by Benson’s mother, Jane. “I checked out every book from the library I could find about home improvement,” Harrell says. She was a quick study and enjoyed the hands-on work, but her efforts to get a job — even an unpaid apprenticeship — in construction failed.

“I gathered up all my courage to walk down to this union hall,” Harrell says. But she was shooed away because she was a woman. “So I walked back out of that hole and started making calls. I said, ‘I will work anywhere. I’ll drive your trucks. I’ll buy your materials,’ but nobody would give me the time of day.”

Give and Ask for Help

“Everyone needs a mentor.” —Iris Harrell

Harrell’s apprenticeship instead took the form of two good friends of Jane Benson. Her construction mentor was Chape Harris, a 70-year-old retired brick salesman, who welcomed her help in his second career installing locks on Dallas homes. Patient and articulate, “he could hold 30 pieces of a lock in his hand and make me feel very comfortable understanding it,” Harrell says. “He would take me to the best hardware store in town for my birthday and Christmas and buy me a tool. A reciprocating saw. A power sander.”

Harrell and Harris worked together for a few years, branching out from lock installations and fan installations to cabinetmaking and larger remodeling projects, and serving a divergent clientele that simply felt comfortable with this unusual team: “Republican widows and separatist lesbians,” Harrell says, laughing.

Her design mentor was Lucille Payne, a Dallas high-society interior designer who not only referred clients to Harrell, but helped her understand how color, lighting, and furniture could enhance a space. (Harrell was so influenced that she became a certified kitchen and bathroom designer in 1995. HRI has had an interior designer on staff since 1995.)

When she and Benson moved to Menlo Park, Calif., in 1985, Harrell deployed the same just-do-it mentality. She completed a McGraw-Hill construction home study course in just two months. Combined with her contracting experience in Dallas, this qualified her to take the state licensing exam. In 1986, she started Harrell Remodeling.

To this day, however, she credits what she calls the “three-legged stool” of Jane Benson (“my first client”), Harris, and Payne for her start. “They believed in me,” she says.

Hire Right. The Money Will Come.

“One of the smartest things any CEO can do is to not hire people who look like them and think like them. She hires people who think for themselves.” —Bella Babot, HRI director of marketing and human resources

It’s a cliche but true, in Harrell’s case. “I don’t know how, but she picks superstar employees at the beginning,” says Victoria Downing, REMODELING columnist and CEO of Remodelers Advantage. Those picks are as much science as art, and begin with a group interview with up to six HRI employees at once. Intimidating? “The funnest interview I’ve ever had,” says Ciro Giammona, HRI’s general manager, echoing a sentiment expressed by others.

Cultural cohesion is critical at HRI. A staff that usually lunches together in the company’s bright, modern showroom space — under a “no work talk at lunch” policy — indicates that they genuinely like one other. And to some degree, the staff is self-selecting, thanks to practices that buck many remodeling norms.

Most obviously, any employee must be comfortable working for and with women, who hold seven top managerial roles. Every employee must also happily deliver the company’s “core differentiators” every chance they get. Stine of Polaris Marketing helped pinpoint one of these years ago: “You ask most high-end, successful remodelers what really matters to clients, and they say ‘quality.’ You ask the customers, and they say ‘love and care.’ They expect the quality.”

Also, though HRI has strong profit-sharing and bonus programs, Harrell does not believe in sales commissions. And annual “360-degree” performance reviews ensure that every team member reviews every other, including back-office but pivotal players in roles such as accounts payable.

Another secret to Harrell’s superstars is her willingness to hire from outside the construction arena. HRI has a stunningly talented team of craftspeople, but Harrell also knows that diverse experience in business and technology are strong assets, particularly given the sophisticated Silicon Valley clientele.

“With Iris’s background as a teacher, she just recognizes potential in people,” Giammona says. “There’s a joke that you can be selected for a new job by walking by Iris’s office. She’ll stop you.” In fact, he notes, a line at the bottom of every job description says, “or as required by owner.”

Giammona began his career as an electronics technician, for instance; his first job at HRI, 13 years ago, was estimator. Beth Leibbrandt designed circuits and built doll houses before becoming Harrell’s first hire in 1986. In the 23 years since, she has evolved from carpenter and painter to senior designer — and HRI’s top salesperson of late, thanks to a minimalist design style and easy rapport that mesh beautifully with the company’s new small-jobs division: HarrellCARE (Construction & Repair Experts).

Ann Benson’s training as a librarian, and then a programmer, whipped HRI’s organizational systems into shape when she became operations manager in 1991. Other staff had careers as diverse as camp director, business owner, and geologist before joining HRI.

Similarly, when Harrell identifies a strong potential addition to her team, she pursues them, doggedly but gently. “She can be very convincing and doesn’t take no for an answer,” says Genie Nowicki, HRI’s senior designer, referring to the months-long “courtship” 10 years ago in which Harrell persuaded her to close her thriving design business and join HRI.

“Always be looking,” Harrell says about finding good employees. “You never know.”

The company isn’t for everybody, needless to say. “Iris is so nice, but she embodies respect. And you will never take advantage of someone you respect,” Babot says. The deliberative hiring process is remarkably accurate in pinpointing good matches, and those who turn out to be marginal players are quickly let go.

“When someone is out of sync, we need to release them to the universe,” Harrell says, ever the metaphysicist-pragmatist. “They’re supposed to be somewhere else!”

Be Resilient. Focus on the End Goal

“Other construction companies blew her off. They said no way. And that’s the wrong thing to say to Iris.” —Genie Nowicki, HRI senior designer

Harrell’s optimistic yet steely resolve serves her well in good times and bad. She is deeply spiritual, a private matter that she rarely shares at work but that helps her stay grounded even under pressure.

The attacks of Sept. 11, 2001, for example, came months after two of HRI’s biggest ventures ever: the purchase of 15,550 square feet of office and warehouse space, and the launch of its employee stock ownership plan (ESOP). As financial paralysis struck, “We knew we had to do just over $7 million to keep this ship afloat,” Harrell says. An emphasis then (as now) was tighter “throughput” — identifying and streamlining slowdowns between sold jobs and production.

Giammona says that those times epitomized Harrell’s ability to find her center, deliver the truth (the company is open book with its financials), and inspire powerful accountability. “She can lead a meeting like nobody, and she said, in effect, ‘We are going to make it through this, and here’s how,’” he says.

That leadership is pulling HRI through the current, more protracted recession. There have been adjustments — a 20% staff reduction, reduced work hours for some, 5% pay cuts for salaried workers, subbing out far less. Yet the remaining 35-person team seems tighter and more committed than ever. “One has to be calm in the middle of a storm,” Harrell says. “Fear is paralyzing.”

Plus, she knows from her favorite sport, golf, that “you have to remember to breathe.”

Similarly, in 1989, when Harrell joined her first remodeling peer review group, she was one of the few women (let alone openly gay) members. Not all the other members were kind or respectful toward her, at least at first, but she focused on her numbers rather than her popularity.

A telling example was when she was told that owners should aspire to revenue that would provide a 10% net profit for the company and 10% for the owner. “What I didn’t know was that most remodelers didn’t achieve that!” she says. She usually did. In fact, HRI was the No.1-ranked company in the group for most of the years she was involved.

 

Credit: John Lee/Aurora Select

Respect, Recognize, Reward

“Many people can stand up and say, ‘We’re so grateful,’ but when Iris said it, you almost got chills. You could see that everyone felt it.” —Bella Babot, HRI director of marketing and human resources

The occasion was one of HRI’s “trade partner appreciate dinners,” an annual event that Babot (who was then in the high-tech arena) had attended as a guest. She hadn’t met Harrell before that night and was “amazed to see the employees of HRI working together as this happy, well-oiled machine.” She was especially floored when Harrell spoke about the professionalism and customer service of each trade specialist. “She was just exemplifying gratitude,” Babot says.

Good trade contractors want to do high-quality, challenging work, of course, and HRI specializes in both. And they really value being paid quickly and well. “I’ll invoice them Tuesday and have a check by Friday, without discussion,” Camolinga says.

“Iris set a standard a long time ago: We truly value our trade specialists,” chief estimator Paul says. “And we work long and hard to make sure we get trade specialists who have the same philosophy as we do.”

Likewise, Harrell recognizes her team at every turn, in ways that range from her un-CEO-like practice of routinely thanking them for specific contributions to the company’s success, to a generous benefits program that includes the literal sense of ownership that the ESOP bestows. (Employees are 25% vested after two years and fully vested after five years.)

Most distinctive are HRI’s “cultural” rewards. The whole team selects an employee of the quarter and an “employee-owner of the year,” with the latter unveiled in a surprise, and frequently hilarious, video produced by Giammona. He’s also a musician, and when people hit their 10-year HRI anniversary, he writes and performs (with backup singers) an equally unique and funny “10-year song” at an all-staff meeting.

Develop Systems. Stick to Systems

“We used to call her ‘the overkill queen.’ Her thought process was: ‘What would my mom expect the house to look like?’” —Deana Bond, HRI chief production manager

Clean jobsites don’t just give comfort to clients; they symbolize a remarkable attention to detail that strengthens the loyalty of trade partners.

“They are very demanding but also extremely organized,” says Tony Fisher of Fisher Power and Data, which specializes in high-end electrical systems. “They organize every detail, from initial walk-through until the job is done.” That, along with a single source of contact for each job, lets his teams work more efficiently, at a lower price, than for companies that need more hand-holding.

A seemingly small but critical detail is protection of clients’ belongings. “They cover absolutely everything,” Fisher says. Painter Camolinga agrees. “A lot of contractors leave protections to us, or only go to a certain degree. These guys go above and beyond, way beyond dropcloths. There’s no cutting corners.”

Such meticulous attention to detail started in HRI’s first year with the establishment of “jobsite rules” — no swearing, no smoking, no radios, no dogs, recycle! — that even now differentiate the company from much of its competition. The company’s countless systems are evaluated, measured, and continually tweaked, yielding continuous improvement in efficiencies and client satisfaction.

There was the employee handbook (1987), followed by “pardon our dust” mailings, job descriptions, a mission statement, job calendars, ongoing client surveys, systematized hiring practices, 360-degree performance reviews, job handoff packages, safety procedures, quarterly all-staff meetings, weekly department and managers’ meetings, committees, and a meticulously crafted marketing plan that maps out everything from print collateral to educational workshops (for which homeowners pay $20) to a “networking schedule.”

Careful evaluation applies to building methods and materials, too. Though HRI is known for its high-end work — Harrell and Benson’s newly renovated home in particular is a model of advanced “smart home” technologies — Harrell prefers to try new things slowly, in connection with the proven. “I have made my team sufficiently cautious” of jumping on new bandwagons, Harrell says. “They want to be advanced, but they’re aware of liabilities.”

Paperwork and protocol logjam? To the contrary, “We have a saying: ‘Who else needs to know?’” Babot says. “Iris has a thing about overcommunication. She’s empowering, and she stands by us.”

Collaborate and Take Calculated Risks

“She’s very creative but has learned to keep her entrepreneurial instincts in check. She has strength and self-discipline, and is always willing to listen.” —Ciro Giammona, HRI general manager

While most of HRI’s systems are generic in function, some are unique reflections of the collaborative spirit that infuses the company. This is due in part to Harrell’s leadership style (her door is literally open to everyone) and in part to the ESOP, which by giving everyone a bead on the numbers, encourages innovation and continuous improvement from all.

One employee’s idea, for instance, was the “HRI Knowledge Base,” an intranet repository of ideas, sources, and lessons learned — easy for all to find when needed. The “People Power Board,” developed by Bond, maps out a three-week projection of “people needs,” accounting for every production employee and every job. The “Magic Barrel,” one for each lead carpenter, contains screws, nails, brackets, duct tape — “probably $1,000 worth of miscellaneous materials you might need” on a jobsite, Bond says.

There’s also “HRI University,” on-site educational programs held at least quarterly; strong support of job training and certifications (an astonishing 23 of the company’s 35 employees are Certified Green Building Professionals, for example); and training for and by trade partners as well.

And contracts, though sometimes 20 pages long, are written in narrative format — more like specific yet warm personal letters than legalistic documents. “We’ve found that clients don’t often read plans well because they have no training,” Paul says. “But if it’s a narrative, they will.”

More recently, HarrellCARE evolved from an idea that Giammona proposed a few years ago, when the company was so busy doing large projects that some smaller projects passed it by. “Ciro talked me into it,” Harrell says. “His thinking was, ‘Why do we throw this good fish back in the water?’” The economic slowdown served as opportunity to map out a system that enables HRI to do smaller jobs efficiently, profitably, and to its customarily high standards.

Collaboration also runs through all HRI projects. Production staff and trade partners participate in job planning from day one, for instance. And, despite having one of the most talented and award-winning design teams in the industry, “collaborating with clients is a philosophy,” Nowicki says. “If you engage the client in the design process, it’s a much stronger relationship.” The tagline doesn’t exaggerate: “We never forget it’s your home.”

Clients are fully aware of their valued role in the process. On a recent tour of several HRI projects, Harrell gestured to the beaming homeowner and matter-of-factly said, “She was lead designer. She had the vision. We just had to get it on paper. It’s really incredible to help someone achieve their dream.”

Be Authentic

“She’ll cut right to the chase, but in a loving way. She’s one of those people who tells you if you have spinach in your teeth, but she also tells you how beautiful the rest of your teeth are. She’s tough but uplifting.” —Michael McCutcheon, McCutcheon Construction

Harrell’s rare combination of blunt honesty and warmth encourages conversations that strengthen outcomes and relationships. “She pushes people; she doesn’t allow them to get away with anything,” Downing says.

“Honesty is always the best policy if presented in a loving way,” Harrell wrote, years ago, as one of her “10 business commandments.” She has always been open about her relationship with Benson, for instance, and while some people may never accept lesbians and gay men, her openness more commonly puts people at ease, and engenders trust and respect.

Another area in which Harrell’s honesty is an asset, perhaps ironically, is sales. Behind her charisma is a terrific capacity to listen and understand and never simply parrot what people think they want to hear. “She’s really good at assessing clients’ pain without coming out and asking about it directly,” Paul says. Thus, in presenting her recommendations, always in a way that makes people comfortable, Harrell might say, “I hear you, but I’m not sure that’s right.”

“Iris will draw a line; she expects the best from people,” Giammona says. “I think she sometimes has more confidence in people than they have in themselves.”

Likewise, her honesty extends to sharing information about her own business with other remodelers. “She is so forthright, so willing to share the good, the bad, and the ugly about her business — how they got to where they are and what’s helped her,” Downing says. “It gives her so much credibility so fast.”

BEHAVE FAMOUSLY

“Iris is a natural schmoozer. She’s modeling for the rest of us.” —Ciro Giammona, HRI general manager

Iris Harrell the person has long been synonymous with HRI the company and even its logo, an outline of an iris inside a purple H. She is well known in the South Bay area thanks to the company’s longevity and community outreach, which the media find irresistible.

Yes, HRI is a perennial winner of design and construction competitions (a forthcoming documentary even focuses on The Forever Home, the universal design concept embodied in Harrell’s and Benson’s home), and Harrell herself has won many high-profile awards for women business owners.

The company was also years ahead of the industry in holding homeowner workshops that let homeowners meet the HRI team. And who better to conceive of the wildly popular “Ms. Fix-It” home improvement workshops for Girl Scouts?

“She is the icon and the brand,” Babot says. But with Harrell’s eventual retirement, the goal is to transfer HRI’s ownership — and its public identity — to the rest of the team, and in particular to general manager Giammona.

“We’re entrenching ourselves in the community,” Babot says. A new ad campaign focuses on employee ownership, for instance. In addition, many HRI staff are on the boards of community and business groups; they are active in disease research and prevention organizations; they sponsor local music and arts events; they reach out to past clients and generally strive to put a positive public face on the company.

“We’re thinking long-term, and we are planting seeds,” Babot says.

Harrell approves. “Good businesses are built on awareness,” she says. “It’s all about emotional intelligence.”

—Leah Thayer, senior editor, REMODELING.

Click here to read about the 2008 Fred Case Award Winner.
Click here to read about the 2007 Fred Case Award Winner.