Coach, salesman extraordinaire, industry statesman, confidante, and market clairvoyant. Ken Klein will always be, to remodelers, the consummate professional, the businessman others emulate -- or envy. For setting the standard in integrity and business savvy, REMODELING awards Ken Klein its Foundation Award for 2002. By Joseph F. Schuler Jr.
Ken Klein didn't get here by being a remodeler. Chame-leon, maybe. Though not in the underhanded sense of the word. Through the years, he and his business, Kleinco Construction Services, adroitly blushed or brightened with their market's needs, giving the upper crust -- the "Who's Who" of Tulsa, Okla. -- exactly what they wanted. And Klein, who turns 59 this month, has done so with uncanny intuition.
"He always seems to be just a few steps ahead of everybody," says his daughter, Kristin Daffern, one of two salespeople in a business that does about $15 million annually in remodeling, luxury homes, and light commercial construction.
Klein trusts his instincts. He brushes off claims of clairvoyance and attributes his adroit footwork to reflexes. And to knowing how to manage large, high-quality jobs -- his 45-employee company does about 50 remodels a year, worth $4 million.
Klein shares his hard-won business mettle through a lifetime of service to the Remodelors Council, the NAHB, and its educational arm, the Home Builders Institute. His optimistic, determined outlook has endeared him to colleagues and competitors. Locally, his philanthropy has made the second-generation contractor a community leader in the eyes of employees and clients.
But it's not just business cycles where Klein moves ahead of the curve. It's business practices, too. He embraced Total Quality Management and self-directed work teams, the lead carpenter concept, project-based incentives, and behavioral analysis for selling, all long before others heard of, or seriously considered, the concepts. He was a founding participant in Remodelers Executive Roundtables when business peer review groups were new to the industry.
"I would regard him as the intelligentsia of the remodeling industry," says Tom Kelly, Neil Kelly Co., Portland, Ore. "He is the brightest person I have met in the remodeling business."
Hammering a nail fast, Klein admits, isn't his specialty. Molding, educating, and growing a business so that it holds its market niche fast, is. Klein has dedicated his life to his company, and although he still sells occasionally, project success no longer depends on him. "I'm proud of the fact that we have customers who are highly satisfied, who are repeat customers, who recommend us to others, whom I have never met," he says.
The Kleinco way
Clients value Kleinco's work long after jobs are finished. It's a testament to Klein, and to the company he's built.
With a college degree in accounting but an affinity for sales and marketing, Klein entered IBM's training school. In the mid-1960s, IBM ran the world's pre-eminent sales training. Klein bested his 30-man class. Presented with honors, his defining skill was singled out: eye contact. Very early, Klein understood the power of meeting a customer's eye with his, because it communicated he was listening, he was trustworthy. It's a Kleinco principle to this day. "Listening is one of the most important things Kleinco offers," says Cindy Wilcox, a Kleinco salesperson.
Also through IBM, Klein learned proposal writing and how to make a well-organized presentation. "Selling to higher-end clientele, you're selling to people who appreciate organization," Klein says.
Kleinco's communication starts with proposals and contracts and expands to weekly, documented, on-site meetings with clients. Kleinco's culture of communication benefits from personality profiling, first brought to Klein's attention in 1991, to learn behavior drivers of employees and prospects.
Klein's transformation to remodeler began in 1970, when, for a reason he can't explain today, he bought 50% of his father's entry-level and spec home business for $25,000.
He learned project management by the seat of his pants. In 1976, when he saw the entry-level home market his father, Ted, had plied for 15 years falling off, he followed his intuition and formed a remodeling division. The move allowed the company to ride out the Oklahoma Oil Bust in the mid-'80s through the mid-'90s.
In 1982, when Klein bought the rest of his father's company on installment, the Tulsa economy was sliding. A big bank that was heavily invested in oil exploration financing declared insolvency. It was the beginning of the savings and loan failure. Not a good time to own a small company, solo.
Two years later, Klein stopped building new homes and concentrated on remodeling, finding a niche among Tulsans who appreciated the company's ear for what they wanted and the eye for quality its craftsmen provided.
In 1988 and 1989, two projects (of the 15,000-square-foot variety) put Kleinco back into new homes -- luxury homes. One was 150 miles away in Arkansas. A succession of large jobs, culminating with the 22,000-square-foot mansion wrapping up this summer (nearly all done cost-plus), further taught Klein how to "scale" his business, Klein's term for using the least resources for the maximum benefit without corresponding increases in overhead. In "scaling," everyone's skills or weaknesses are leveraged or compensated for.
Having learned how to decentralize responsibility down to the jobsite in remodeling, Kleinco was well prepared now to work in new construction.
The big jobs were proving grounds for good communication and remote site management. They helped Klein further develop trust with employees, to set expectations and make them accountable. In growing, he found he had a knack for hiring people who shared his vision for quality.
Klein absorbs new processes and business philosophies mostly by trial and error. The ones that work, stick; others are refined or tossed. His project leader incentive pay program, for instance, used to be based on beating a job's labor hours. Several iterations later, it has become a three-point system that often boosts the salaries of Kleinco's seven project leaders by up to 30% apiece. The way the program works is that project leaders get 1% of job cost when the customer is satisfied and either the schedule or budget is met. When the customer's satisfied and both the schedule and budget are met, they receive 1.5%. If the customer isn't satisfied, the project leaders get no bonus. Klein says over the past five years, more than 90% of the 50 average annual remodels met the customer service criteria. An independent firm surveys clients who contract for jobs of $10,000 or more before incentives are paid.
Leading a growing industry
Klein became founding president of his local remodelers association and established ties with NAHB's Remodelors Council. Klein credits NAHB with his survival. "Without the association, I believe we would not have survived the mid-'80s," he says. The national ties allowed him to share tales of woe with remodelers from Alaska and other states with similar economies. They shared survival tactics, often at NAHB seminars Klein gave.
Klein's national Remodelors Council chairmanship timing was lucky, because in 1989, when he chaired the council, remodeling volume nationwide topped $100 billion, catapulting him, and the remodeling industry, into the news. Klein was a prime player in getting the first Remodelers' Show going in 1991. He connected with NAHB's senior officers and convinced them it was the right step for the emerging industry.
"Ken was one of the first ones," says Walt Stoeppelwerth, industry consultant and Remodeling columnist, to "make the effort, to convince the builders that remodeling was a part of NAHB."
Prior to Klein's tenure, NAHB wasn't used to having remodelers participate on association committees. Klein helped increase committee participation within the Council and the entire organization. With Council chair Marty Azola, who preceded Klein, he "birthed" the Certified Graduate Remodeler program, further promoting professionalism within the business of home improvement. He was among the first graduating class. There are now close to 1,000 CGRs.
How was he so successful at NAHB? And how does he continue to be? Klein's business coach, Clay Nelson, says, "He's the politician I could never be. He knows how to speak in a way that doesn't offend anyone but gets the whole room to move to the proper position."
Barry Helm, a competitor who sits with Klein on the board of the Home Builders Association of Greater Tulsa, says Klein sees the big picture. Helm says Klein was first in Tulsa to offer design/build services and to get up-front design fees. Helm and other Tulsa-area contractors have followed in Klein's footsteps. Helm also recalls how a Kleinco home tour fundraiser turned into an annual event for Tulsa remodelers.
Learning from technology
Klein has advocated technology since his IBM days, and he now uses a Palm organizer.
Stoeppelwerth says Klein was among the first remodelers to use job costing software. "We've had personal computers in our company since 1983, which was actually the first PC that came to the market," Klein says. "I'm not sure it was called a PC then, but it was by Digital Equipment."
Klein hasn't pushed technology in the field, though. "That'll come, but I'm more interested in my guys knowing about engineered lumber and what new tools can do to increase their productivity."
Klein has learned from technology, and remodeling's readiness for it, particularly in his personal investment in Homestore.com, which supplies home improvement information and services. NAHB, also a stockholder, has a strategic alliance with Homestore, and Klein, as chairman of the public affairs committee, helped make the connections. With NAHB's blessing, he joined the Homestore board. Homestore's Remodel.com promised to link homeowners seeking improvements with remodelers nationwide. But Remodel.com joined other "dot-bombs" when it learned it didn't have enough capital to aggregate consumers and remodelers, a move Klein thought was possible. "Pioneers are often noted by the arrows in their backs," he says. "And Remodel.com was a pioneering kind of thing.
"I paid good money for the stock, a lot more than what it was worth," he says. The stock peaked at about $135 and now sits at about $1 a share. Klein still believes in the potential of Homestore and its offerings, particularly Homebuilder.com and how it connects consumers with contractors for home improvement services.
Klein continues building, transforming the business his father gave root to. He says he's realizing, as his company wraps up the mansion four years in the making, that the gravy train is ending (for now). Smaller jobs (leads have been clustering in the $25,000 to $50,000 range) may be Kleinco's future.
With Tulsa's Williams Communications in Chapter 11, and the city's WorldCom offices slashing their 3,000-employee workforce by 400, his market is again changing. Both developments hurt Kleinco "big time," Klein says. Leads are down 7%. Closing rates, down. Average job, down from $86,000 to $50,000. "We remember the mid-'80s, the Oil Bust," Klein says, "so we have one eye askance, looking back."
The other eye is dead ahead. "I always have a Plan B," Klein says.
Klein, too, is undergoing a restructuring of sorts, within himself. He admits that until five years ago, his family life suffered due to his fervent dedication to his business. His wife, Judi, blames his German work ethic. Klein blames his driving need for financial security. His daughter says he's always felt the need to support his family at home, as well as his family at work, particularly a core group of employees with 12-plus years of tenure.
But in 1998, doctors discovered a benign growth in Judi's brain that required operation. At the time, Klein was on the fast track to be a candidate for president of NAHB. The doctor's discovery, Judi's subsequent surgery and recovery, and the death of his father made Klein rethink priorities. "I realized how fragile life is," he says, "and looked at some things that up until that time were very important to me. I realized things had changed."
He admits the decision not to go higher on the NAHB ladder came with disappointment, yet he knows he has gained much more. Had he decided to jump in, he no doubt would head the 205,000-member association in the near future. Today, he's content to use his political instincts as an adviser to NAHB chairmen.
"I don't believe the 'why' or 'how' is important," he says. "What's important is to recognize what's happening and what do you want to do going forward?"
Judi Klein says they have a family expression now: "What is?" And Klein has taken living in the present, with whatever it brings, to heart. He doesn't look back. He asks "what is" today and marches ahead with impunity. "My life is fairly intense -- a lot going on, moving pretty fast, pulled in a lot of directions," Klein says. "That's for a reason. There are still some lessons I'm learning."
Klein's Credo for Success
Hold yourself accountable to the same standard you do others.
Listen to customers and employees. Act on your instincts.
An imperfect plan crafted by employees has a much better chance to succeed than a perfect plan put together by management.
Measure customer satisfaction, budget, and schedule. Everything else will follow.
Have a plan for your personal life and your business life.