Business

Kimley-Horn builds nationwide business, helps reshape the Triangle

Aviation Project Manager Ed Joyner, pulling for N.C. State, and about 130 employees at Kimley-Horn’s Cary office participate in a lunchtime gathering to celebrate March Madness on the first full day of play in the NCAA tournament.
Aviation Project Manager Ed Joyner, pulling for N.C. State, and about 130 employees at Kimley-Horn’s Cary office participate in a lunchtime gathering to celebrate March Madness on the first full day of play in the NCAA tournament. clowenst@newsobserver.com

Law firms have their rainmakers. Engineering design firm Kimley-Horn, which boasts more than 2,300 employees nationwide, has its practice builders.

Practice builders, senior professionals scattered among the Cary-based firm’s more than 70 offices nationwide, have a perpetual green light to pursue any and all business opportunities they deem worthwhile.

“She doesn’t have to get approval from somebody else. She doesn’t have to run it up the corporate ladder,” said CEO John Atz. “So we’ll often say we’re as nimble as a single practice builder’s interests.”

All told, they’ve been pretty nimble lately. Kimley-Horn added 326 employees last year as gross revenue, which includes dollars that Kimley-Horn passes on to subcontractors, jumped 19 percent to $523.8 million.

In a cyclical industry where business is closely tied to the construction industry, Kimley-Horn is benefiting from an up cycle as bulldozers and construction cranes swing into action nationwide.

“We’re seeing, across the board, generally positive trends,” said Jon Wilson, the firm’s regional leader for the Southeast. “Some are hotter than others.”

At the same time, however, Kimley-Horn’s growth has been far outpacing the market.

Consider that total revenue at the nation’s top 500 design firms rose 2.7 percent in 2013, according to industry trade publication Engineering News-Record, whereas Kimley-Horn’s revenue jumped 16 percent that year. Consequently, Kimley-Horn jumped from No. 39 to No. 33 in the publication’s latest rankings.

The company’s robust growth is a welcome reversal from its experience during the recession, when the company was forced to shed about one-third of its workforce through layoffs and attrition.

The firm sees its singular focus on keeping its employees happy and productive as the core of the company’s success.

Kimley-Horn is a regular on Fortune magazine’s annual ranking of the best U.S. companies to work for. It ranked No. 25 on the latest list released earlier this month, up 48 spots from No. 73 last year.

“We’re constantly in a battle for talent,” Wilson said. “When we hire people, we tell them we want you to spend your career here. And they’re not going to spend their career here if they’re not in a place they value.”

Although its business is national in scope, Kimley-Horn has three Triangle offices – its headquarters in Cary, plus Raleigh and Durham – that collectively employ about 190 workers. And the company, which was founded in 1967, has left its fingerprints on a host of projects transforming the Triangle’s landscape.

Some examples: It worked on the Citrix building that has injected new blood into Raleigh’s Warehouse District, on renovation of the streetscape in downtown Durham and on the Triangle Town Center mall. It’s also knee-deep in Wake County’s eagerly anticipated transit plan.

Kimley-Horn was involved in both of the makeovers of Fayetteville Street in downtown Raleigh. It worked on closing the street and turning it into a pedestrian mall in 1976, and it also worked on the re-opening the street to vehicles in 2007.

“We are proud to be a part of what’s going on downtown,” said Mark Wilson, the firm’s chairman and former CEO.

Wilson was referring not only to the downtown Raleigh projects the firm has worked on, but also its plan to consolidate its Cary and Raleigh offices in a single downtown location. It hopes to have a lease sewed up soon.

Team sport

Engineering design firm is a catch-all phrase that encompasses an array of disciplines: civil engineers, landscape architects, traffic and transportation engineers, urban and land planners, environmental engineers and environmental scientists. Kimley-Horn employs them all.

It’s team-oriented work, with Kimley-Horn sometimes spearheading a project and at other times playing a supporting role.

For example, it will work alongside an architectural firm on buildings, with the architect designing the structure while Kimley-Horn is in charge of “the spaces in and around the buildings,” said Jon Wilson. That can include everything from the sidewalks, benches and trees to drainage, traffic flow and utilities – water and sewer.

Kimley-Horn has been playing that role on SkyHouse Raleigh, a 23-story luxury apartment tower nearing completion in downtown Raleigh. The lead developer on the project, Atlanta-based Novare Group, also hired Kimley-Horn to work on more than 10 other SkyHouse towers elsewhere that either have been built or are under construction.

“Real estate development is a team sport, and you are only as good as your team members,” said Jim Borders, Novare’s president. “They have done a good job of getting it right and getting it done.”

Kimley-Horn also frequently gets involved in shepherding a project through the regulatory process, as it did with Citrix’s downtown Raleigh building.

“They did a great job,” said architect John Warasila of Alliance Architecture, which has an office in Durham and designed the structure. “The project had a lot of moving parts. … They were able to navigate the planning process in Raleigh without us having to stop and redo anything. We always made forward progress.”

Balanced revenue

Unlike many engineering firms, Kimley-Horn doesn’t divide its offices or practice areas into separate profit centers. Instead, there’s just a single profit center for the entire firm.

The implications go far beyond the company’s accounting department. It allows those working on a project to draw upon professionals in different disciplines, and different offices, if needed.

“It allows us to put our best teams on the floor,” said Jon Wilson. “A lot of firms have trouble with that because they are fighting (among) themselves on profitability.”

Kimley-Horn’s revenue is evenly split between government and commercial projects, which provided a cushion for the firm during the recession since government-funded construction held up much better.

Although reducing its staff by about one-third during the recession was painful for Kimley-Horn, some of its peers fared worse.

“There are a lot of firms that we competed with (prior to) the recession that aren’t there anymore” because they either closed their doors or had no choice but to sell the business, said Mark Wilson. Indeed, Kimley-Horn executives assert that the company’s growth in the past few years is partly attributable to the fact that it emerged from the recession with key people still in place.

The company’s ownership structure has been engineered for longevity.

Title free

Although in its early days ownership was split equally among its three founders, today the firm has 388 owners – all current employees in the firm – and nobody owns more than 6 percent.

“Our mindset for ownership is, if everybody had it, it’s not special anymore. And if only a few people have it, it’s not attainable,” Atz said. “We want to recognize people who are contributing to our success by granting them the opportunity to be an owner – and keep a high enough bar that it really means something. People aspire to it.”

When owners retire, they’re required to sell their ownership stake back to the firm.

That has helped the firm remain independent. Many of its peers are owned by just a few professionals, which can lead to transition issues when retirement time rolls around. That can trigger a decision to sell the business so they can cash out.

“One of the things that I’m probably most proud of is that we don’t have some of the challenges that I see in some other places,” said Mark Wilson. “(When) I step down as chairman, it will be a non-event within the firm.”

The management structure is unconventional as well. The firm is run by a 13-person management committee that includes the chairman, the CEO, the firm’s six regional leaders and the heads of functions such as marketing and human resources.

“It’s unusual for us not to be able to reach a consensus,” said Atz, who downplays his role as CEO.

“We only use CEO when there is some outside entity that says, ‘Who is your CEO?’” he said.

True to form, the business cards that Atz hands out identify him simply as “John C. Atz, P.E.,” or professional engineer. In fact, the firm doesn’t use titles on any of its business cards.

Humble beginnings

Kimley-Horn’s roots go back to 1966, when transportation engineers Bob Kimley and Bill Horn formed a transportation engineering firm whose first office was in a three-room apartment on Raleigh’s Western Boulevard.

“Bob’s office was in the master bedroom, Bill’s was in the kitchen, and the print machine was kept in the bathtub,” notes the history the firm assembled for its 25th anniversary.

When a third engineer, Ed Vick, joined them in 1967, they formed a corporation. Kimley-Horn considers that incorporation date as the year it was founded.

Staff writer David Ranii

Kimley-Horn

Business: Engineering design firm

Headquarters: Cary

CEO: John Atz

Employees: 2,337

2014 gross revenue: $523.8 million

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