Budd Group CEO Joseph Budd joined High Point University President Nido Qubein in the Power List interview, a partnership for discussions with influential leaders. Interview videos are available at www.businessnc.com.
This year marks the 60th anniversary of The Budd Group. Joe Budd leads a family-owned janitorial business in Winston-Salem with 5,000 employees and more than 1,000 clients in 12 states, stretching from Pennsylvania to Georgia. Budd has a bachelor’s degree from High Point University and an MBA from Wake Forest University. An avid pilot, he is board chair of the Corporate Aircraft Association, a trade group promoting general aviation. His company also sponsors Nido Qubein’s show on PBS NC.
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This story includes excerpts from Budd’s interview and was edited for clarity.
How did the business start? Was it your dad who started the business? I’m generation two. My father, Richard Budd, started the company in 1963 after graduating from High Point College back in the day. He started it when I was 1 year old.
What was the business at that time? In the early 60s, it was selling cleaning supplies and equipment just across North Carolina to schools, colleges, industrial plants, the tobacco industry, hospitals and medical facilities. Now, we do janitorial services, landscaping. We do landscaping maintenance and installation, irrigation. We also do maintenance. And we have a growing business we call “specialty services” which is disinfection, air quality and really anything that our clients want us to do.
I like to say anybody with a large facility. So, industrial, manufacturing, hospitals, schools, colleges, K-12 schools, high-rise office buildings, business parks, homeowners associations, large real estate complexes, corporate campuses.
What is your biggest challenge? Labor. It’s also our biggest opportunity. We have about 5,000 employees and we are very front-line focused. We have more turnover than a lot of businesses but we have turnover of about 50%, which is about half of our industry standard of 100%.
I don’t know how you sleep well at night? It’s a big challenge but we really work on our culture. We work on making The Budd Group a great place to work for people who like to serve. We have mobile vans that are wrapped in our logo, and they go out after hours. They go to churches, community events, baseball games, set up the mobile vans and we do recruiting. We are recruiting almost 24/7.
You pay more than minimum wage, right? We haven’t paid minimum wage in probably 20 years. Our starting pay is about twice minimum wage in most places.
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It’s got to be very expensive to constantly be in a cycle of replacing current employees? Every team call that we have starts with a safety moment, and then we talk about retention. We have every leader in our company engaged in how do we retain great employees. We have an app, the Bee Hive, that everybody who has a smartphone can come into contact with me and any leader in our company, and access to safety and training data and anything they want.
Do they call to say, “I love you,” or, “You’ve got to pay me more, dude!”? I get very few messages about paying me more. What they want is recognition. They want to be a part of a team, and so when they put a picture on the Bee Hive about a front lawn that has been striped and really looks nice, they can put before and after pictures. The power of a “like’’ on our internal social media from me and my leadership team goes a long way to increasing retention.
What percent of your overall expenses is related to payroll? Approximately 80%.
Why has employee turnover become so prevalent?That’s a really good question. We study our demographics. We have a lot of data in our human capital management system. I think people are transient. Fortunately for North Carolina, we see a lot of people moving in, which has been really great for our economy. And there’s been a little bit of “unsettledness,” whether you work in a facility or work at home and the hybrid models are still being tested.
Do you have to teach your employees what you want them to do? I have seen over the course of my career that the front-line employees in landscaping, janitorial maintenance are becoming more skilled. The equipment is becoming more technical. They require more training and the burden of that training is on us as the employer. Our clients like Toyota or a medical facility want us to be safe and they want us to be efficient and know our craft at a high level. We can’t just take an employee and put them in there without training. So, we have a large training department that does on-the-job training.
Has your growth been mostly organic or M&A? The first 20 years were organic. The next 20 had a lot of acquisitions when we were growing outside of the Triad. The last 20 years have been primarily organic.
Why did you stop M&A? We were pretty good at selling our services ourselves, and we believed that the business that we can develop on our own stays longer than the business we would buy. We have a very high client retention rate and we believe that we can only grow as fast as our leadership, and we like to develop our leaders from within.
What is happening in terms of government regulation affecting your business? The biggest thing that the government could do for our industry is fix immigration. We need legal immigration. And if our government would tackle that issue in a bipartisan way, and even just go after the low-hanging fruit, it would be a game changer for our economy. It would help control inflation, and it would create opportunities for a lot of people in our country.
What would you say about this to your brother, U.S. Sen. Ted Budd? What I would say to Ted is, fix DACA, that’s the dreamers. We have a lot of wonderful young people that were brought into this country. That’s a layup. Fix that. And then, also, look at what President Reagan did in the mid-80s. He granted immunity to a lot of the immigrants that were here in our country, and he did it in a way that was a win/win for our country. We need to find a bipartisan way to fix immigration.
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Also, our K-12 education system has issues. When you look at the third-grade reading and math scores, that is a real problem in our country. We have to fix reading and math because if you don’t get it by the third grade, it’s really hard to catch up.
Does Ted agree with you? I think Ted sees these issues. There’s a lot to do.
Let’s go back to your business. Where are your efficiencies of scale? We do it with training, leadership, equipment and supplies. When my father started this business, we were cleaning at a rate of about 2,000 feet an hour. Today, we clean at rates approaching 8,000 feet an hour. Most facilities are non-smoking today and so that speeds things up. Robotics speeds things up. The way buildings are designed also helps.
What is the hardest building to keep up? A middle school restroom is probably the hardest to clean.
What about in industry? Industrial facilities where you have forklifts moving back and forth. You have to be very careful in those. And sites where there’s a lot of dust. That can be carbon in the air. You have to have to be really careful in industrial facilities.
I understand you are a pilot with 9,000 hours, and you fly to visit your facilities. It’s been a great business tool. It’s quite the time machine. It allows me and our leadership to get to our different offices. Today, we have a plane in Nashville. Tomorrow, there will be one in Indiana and maybe Ohio.
Is business going to be tougher over the next three years? I think we will have good organic growth. We have a great pipeline of opportunity. The key is to keep your existing business, and so we have to really work hard at that, and continue to focus on our front-line workers, and continue to develop strong leaders. It’s been a great recipe for success.
What is your biggest worry today? It is probably continuing to recruit, train and retain. And then I worry about the polarization of our politics. It’s unfortunate. There’s a lot we can do together.
I have a great belief in the notion that somebody can come up with an idea, work very hard, take appropriate risks and realign as necessary, deal with various economic conditions, and yet have the grit and the faith and the courage and the tenacity to continue to do that. You and your family have exemplified that to a very high level of excellence.
Thank you. ■
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