Converging on Greatness
“In January of 2001, what we did was literally sit down with an easel and put down all the things we didn’t like about large companies and all the things we did like about them, and all the things we didn’t like about small companies and all the things we did like about them,” remembers Greg Lernihan, co-founder and now president. “When our first eight leaders joined us in June of 2001, that became the core of our values and beliefs. That’s what started Convergint.”
The result of what they wrote on those easels became the 10 Non-negotiables of Convergint. They promise results and emphasize communication, a positive work environment, being accountable, having integrity and leading balanced lives.
“We have our values and beliefs on the home page of our Web site, and we will never change that,” Lernihan points out. “The first thing we did with the eight key leaders was flesh that out and develop the values and beliefs. What is Convergint going to stand for? We look back on that as one of the best things we did.”
Adds Dan Moceri, co-founder and CEO, “We developed this and wordsmithed it after we had more colleagues onboard. It really is what helped get us to this point six-plus years later. It has become the backbone fiber and culture of the company. Everything we do tactically or strategically centers around these values and beliefs.”
Lernihan continues, “We saw a tremendous opportunity to build a company on open systems versus a proprietary environment. It was a big deal to offer our customers a choice of products and service. We were fortunate that the products were right for that.”
They started in that basement by writing a business plan, testing it in the search for capital and then setting up product partners. “We had eight key people who had been calling us to join the company,” Lernihan recalls. “After they joined, we officially launched the company in June of 2001.”
The search for capital soon paid off. “We were successful with our business plan in attracting a very strong strategic partner who wound up funding the startup of Convergint,” recalls Moceri. “It was nice to have a strong financial partner. That allowed us to focus on the infrastructure to get the company going.”
Those joining the company had 15 to 20 years of experience in the security, integration and building systems industry, points out Tony Varco, vice president of the security division, who was the third person to join Convergint.
Moceri and Lernihan had worked together for nearly 20 years at Siemens, and Varco had spent most of his 18-year career there working with Lernihan, who had hired him at Siemens.
Moceri had been president of the security division of Siemens Building Technologies, Buffalo Grove, Ill., when he left in 2000 and had spent 24 years there, practically his whole career, as had a number of other senior managers who joined Convergint.
“We wanted to really build something a little bit different, so we decided it was time to move on,” Moceri explains.
“There were a number of people out there who had a very similar vision,” Moceri points out. “Those were the initial people who joined us and continue to join us today. The key is that the people who head up the strategic businesses and local offices share a similar vision to what Greg and I had envisioned.”
Those people who joined Convergint initially also had industry contacts that allowed the company to bring on its suppliers early, which now include Lenel, GE/EST, Axis Communications, Pelco, DuKane, Bosch, Silent Knight, HID, Sony, Honeywell, Winsted, Cooper/Wheelock and Cornell. Distributors include ADI, Wynit, Anixter and CSC.
Managers have an ownership interest in the privately-held Convergint. “We wanted our leaders to think and act like owners, so we would get that passion of ownership all across North America, and that has been very successful for us,” he maintains.
Lernihan explains the significance of the company’s logo. “We are in the HVAC, fire and life safety, and security business,” he lists. “If you look at the logo, ‘i’ comes through as the head of a dotted ‘i’ for integration and for people. The ‘i’ is the figure of a person, with the dot being the head, and the rays are intended to be all the different systems coming together or different business processes all focused on people and integration.
“So we saw back then the convergence going on, which is now a buzz word, not only for logical and physical but also convergence of all these different businesses,” Lernihan declares.
Why Flat Management?Convergint believes that maintaining a flat organizational structure will prevent customers from getting lost in layers of management.
“We all work very closely together, whether on strategic or tactical issues,” Moceri points out. “We’re very visible with our customers as well.”
The company’s 18 field offices are called technology centers. “We want to stay as close as we can to these Convergint technology centers, and the people running them and the customers they serve,” pledges Varco. “So by maintaining a really flat organization, it’s allowed us to do that and truly differentiates us from a lot of the people we compete against.”
Moceri emphasizes the accessibility of the company’s top managers. “If a customer has an issue, and if that customer wasn’t satisfied with the local representatives on their account, which very seldom happens, they literally can pick up the phone and call, and we pick up the phone and answer it,” Moceri emphasizes. “We don’t have layers of people to screen calls. We’re very accessible to the customer.
Customer service is really what Convergint sells, not products, Moceri emphasizes. In 2006, Convergint received the Frost & Sullivan Customer Service Leadership Award, which recognizes excellence and commitment in providing service solutions tailored to customers’ needs.
“I like to use the phrase that we are a service provider that just happens to sell a lot of product,” he explains. “That reinforces what our whole strategy is.”
That service has been evolving with customers’ needs. “It is our customers who are helping to define who we are and the services we provide,” Varco admits. “As more and more of these larger and more strategic accounts get onboard with us, they’re taking us into some very interesting areas.”
Among Convergint’s customers are Capital One, Boeing, Texas Instruments, BP, Chevron, Schlumberger and the Army Corp of Engineers.
“These are global organizations with global needs, and really because of that, it has helped us to develop the kind of value-added services we needed to respond to them,” he explains. “So the complexity and the breadth of those services have changed significantly since we started the organization.”
Customer report cards and surveys help determine customer satisfaction. For its larger customers, the company uses InfoCentre, a Web-based service management tool that is integrated with customer service representatives. It functions as a 24/7 service desk for customers with service requests. Customers also can track service work orders by telephone, fax, e-mail or through a customized Web portal.
Convergint holds Technology Days at customers’ facilities with manufacturer partners on biometrics, IP video, video analytics, access control and other technologies.
BUSINESS TO DOUBLE BY 2009In June 2007, Convergint was named the fastest growing company in the Chicago area by Crain’s Chicago Business magazine, a Chicago-area business publication. In 2003, Convergint’s growth rate was 124 percent, and in 2004, it was 74 percent. Current growth rates are in the 25-percent range.
The company also was ranked in the top 40 percent of the Inc. 5000, a list of the fastest growing companies in the United States, with a three-year growth rate of 187 percent.
“The bottom line is we are having a great 2007 and will meet or exceed our growth targets,” Lernihan predicts. “2007 will be another record year for us by a significant amount.”
Managing such growth is a challenge, Varco points out. “Our greatest challenges are now as we continue to grow at an incredible rate in the 25 to 30 percent range, is our ability to maintain the high service standards we’ve set,” Varco declares. “That certainly speaks to our infrastructure.”
The company specializes in security integration, building automation control and fire and life safety. “That business has been terrific for us,” Lernihan notes.
Another factor is the growth of IT systems. “The other thing we’re seeing as time is moving on is that our company is becoming more and more IT-centric and really learning those skills,” Varco notes.
Over the last two years, the company has started a company-wide IT certification program for key employees. Of Convergint’s 520 full-time employees, 67 currently are skilled in computer information technology and networking.
“Last year, we put 50 people through it, and this year 50 people are going through it,” Moceri notes.
The program is designed to ensure that employees with IT skills are on the staff of each technology center to support customers. Convergint has its own IT certification manual, and the company obtains IT network certification testing through CompTIA, Oakbrook Terrace, Ill.
The company started with a seven-year financial plan, Moceri notes, but now uses three-year and annual financial plans.
“We support that with things like personal goals,” Moceri adds. “Our people all have personal goals. We sit down and review them on a quarterly basis and have annual performance reviews.”
EXPANSION AND ACQUISITIONS?Does Convergint plan to continue expanding geographically? “What happens quite often is the customers are driving us to expand geographically,” Moceri point outs. “Some of our very successful customers will pull us into some new territories. We will continue to do that as it is reasonable to do so.”
But expansion will not be as much by acquisition. “We acquire other companies, but not very actively,” concedes Moceri. “The bulk of all our field offices has been from internal growth. We’ve started them up from scratch.
Adds Varco, “It’s very difficult to take an existing business and integrate it with an organization that’s as culturally driven as Convergint is. That’s why our focus is to grow organically and internally, and going out and finding there’s business everywhere.”
That said, Lernihan admits, “We will actively consider acquisitions. We’ve been very successful with organic growth and being able to build on existing business, but if the right acquisition comes along, we’ll certainly evaluate it.”
Convergint has had numerous offers to sell the company from investors, “but we have no interest in selling Convergint and love running this successful company with the team we have,” Lernihan insists. “We’re very challenged, and it’s also very rewarding.”
Convergint’s expansion will continue as the company works toward its goal of doubling its business by the end of 2009. This year, the company opened new technology centers in Nashville, Tenn., and Denver, and is on pace to add more than 100 employees during 2007.
Nearly 100 percent of the video systems the company now installs are IP-based, which will require continued development of employees’ IT skills. The company’s strategic account business also has grown significantly in the last year and is expected to continue driving growth.
Moceri sums up the company’s philosophy in three parts. “One is we service our customers better than any other competitor,” he enumerates. “The second one is to attract and retain the best people in the industry. The third one is to have lots of fun along the way!”
Sidebar: Vertical DiversificationVertical Market - % of Total Revenue
Education - 15
Industrial - 15
Health care - 10
Government - 10
Property management - 10
Airport - 5
Entertainment - 5
Financial/banking - 5
Hospitality - 5
Law enforcement - 5
Retail - 5
Transportation/distribution - 5
Utilities - 5
Source: Convergint Technologies LLC
Sidebar: Fostering Employee DedicationOffering world-class customer service requires dedicated employees, and this is an area Convergint Technologies LLC, Schaumburg, Ill., emphasizes.
“Absolutely every time when I’m speaking to new customers, it’s first and foremost with our people â€” the people we have, and the skills and knowledge and leadership skills they bring to the table with their skills as it relates to servicing customers,” stresses Tony Varco, vice president of the security division.
Dedicated employees need strong motivators, and the company has many of those. “We offer a great work environment,” asserts Greg Lernihan, co-founder and president. “Our 10th value and belief is fun and laughter on a daily basis â€” so I’ve got that going for me, which is nice.”
That belief is put into practice by employees on one paid day which they can take off specifically for fun and laughter. “Our only requirement is that it has to be family-centric,” Lernihan emphasizes.
The company also has a culture of having fun in the office, with activities such as a chili cook-off, pumpkin carving contest and jersey days.
“We don’t know any other company that has fun and laughter on a daily basis as a core value and belief,” Lernihan maintains. “We think it is unique. The bottom line is we have a really nice work environment.”
The company offers medical, dental, vision, life and disability coverage along with a 401K plan. It also encourages its employees to draft written annual goals for personal and/or business development that are reviewed throughout the year.
Convergint’s new performance review form has been designed around the 10 values and beliefs of the company. A colleague survey is completed every two years that asks employees to evaluate the integrity, beliefs, values and work lives of the company and their fellow employees.
A voluntary health screening program has discovered for at least 10 employees serious health conditions of which they were unaware. A plasma television was given away as an incentive to participate in the program.
Part of the employee ethic at Convergint is community service. On Social Responsibility Day, which occurs on the anniversary of the company’s founding, June 18, Convergint gives its 520 full-time employees a paid day off to help local community organizations and charities. The cost of this is calculated to be $300,000 annually.
Lernihan estimates Convergint has donated more than $750,000 in labor and materials to various charities including food banks, homeless shelters, boys and girls clubs, victims of Hurricane Katrina and all types of charitable organizations. The company joined 34 others on the honor roll of the Center for Companies That Care.
Convergint encourages its employees to take active roles in industry organizations, such as the National Fire Protection Association (NFPA), the Building Owners and Managers Association (BOMA) International, the American Society for Industrial Security (ASIS) and the Securing New Ground (SNG) investors conference.
“We ask our employees to take on a leadership role as it relates to driving the industry through those associations,” Varco relates. This helps them better understand the issues and challenges facing the industry, he maintains.
Sidebar: ConvergintConnect Has National ReachAs the customer base of Convergint Technologies LLC, Schaumburg, Ill., expanded, those customers had offices in many different locations in which they wanted serviced. To provide service in locations where Convergint had no office, the company’s ConvergintConnect program was created.
“We go out to various marketplaces depending on our customers and the locations they have, and we go through a discovery process in the market, seeking the best and brightest integrators, and taking them through a rigorous certification process to become ConvergintConnect partners,” explains Tony Varco, vice president of the security division. “They can participate in the servicing of these larger, more strategic types of accounts.
“They’re typically getting involved with projects and opportunities they never would have had a chance to get involved with,” he declares.
Compensation for these partners, who now number more than 30, is determined on a case-by-case basis. “Typically, what you’ll find is there are times we split revenue on jobs, and there are times when 100 percent of those revenues flow through those providers,” Varco continues. “In the end, the financials have to work for these customers.
“What you’ll find is a mixed bag of different types of ways to structure the relationships,” Varco relates.
“First and foremost, we have a customer that needs to be serviced,” he points out. “Rather than parachute into these areas to perform a job, we know that what’s most important is the service structure that’s left behind. We know you can’t do that if you’re parachuting into a territory. We’d rather set up a Convergint partnership where they can participate in installed work and ongoing service of these customers.”
Sidebar: On Track to Exceed $100 M
2003: $28.6 - 124
2004: $49.8 - 74
2005: $65.2 - 31
2006: $82.0 - 26
2007: $102.5 - 25*
2008: $128.0 - 25**
* Estimated ** Projected
Source: Convergint Technologies LLC