Leadership Transformation and Culture Change At Isaac Heating and Air Conditioning

Isaac Heating and Air Conditioning was started in 1945 by George T. Isaac and is now in its third generation of family ownership. The company is led by four brothers who fill different roles in the company. The current president, Ray Isaac, who had worked in the family business since he was 14 years old, described his father George as a servant leader, dedicated to customer satisfaction and with a strong work ethic. But there was a difference between the positive culture espoused in the office and the negative culture permeating the field operations. While field operations delivered quality work, there was a price to pay from workers who were unhappy with how they were being treated by management.

Things worsened when Ray became vice president and general manager. After several outside attempts to unionize field workers and frustration with managing a disgruntled workforce, Ray, who had become president in 2001, was ready to call it quits and find another job. Recognizing Ray’s frustration, his father suggested a leadership program in the hope that it would help his son become a more effective leader. 

What transpired was a complete transformation in Ray’s approach to his failed leadership. It started with his realization that he was the problem, not the field workers. He struggled connecting with field workers, making demands while expecting compliance. His traditional philosophy of pay as the reward for work wasn’t working, and he did not know how to change it. He knew he needed to make dramatic changes if the company was to grow and prosper.

This self-reflection led to many changes, beginning with a vision of what he wanted his company to be. This vision, written in 2005, was the foundation of the culture change that Isaac Heating and Air Conditioning was about to undertake. For the first time, the company recognized all stakeholders as part of its vision and made a complete shift in priorities, emphasizing safety first, followed by employees, clients, and, finally, the company. The vision also recognized the importance of making work an enjoyable experience for workers, clients, and the community. 

Ray didn’t stop with a vision. He also began to codify the core values of the company: safety, uncompromising integrity, accountability, excellence, outstanding service, and work-life balance. This was a major shift in the company’s focus.    

Introducing the new culture required Ray to acknowledge the failing of the old one and getting buy-in with management and the workforce. Admitting his role in the toxic culture that he had helped to create, Ray shared his vision and core values and began the journey of changing the soul of his company.

One area that often creates tension in family businesses is the ambiguity of ownership and the organizational positions held by family. The Isaac family avoided this conflict by differentiating the role of owner from each individual position within the company. Isaac family members did not use their surname to curry advantages or use their ownership to assert power. Ray had the full support of his family, who embraced and supported the new culture.

There was skepticism among field workers, and some workers were lost to the unions that tried to organize the company. Over time, worker trust grew, and the policies that prioritized workers first began to take hold. One major change was giving workers more autonomy in performing their field work. Another was restructuring incentives in favor of increasing wages and sharing in company profits. And there was an intentional relaxation of the work environment, incorporating celebrations and levity as part of the culture. These changes were well received by field workers. 

One of the best examples of making workers a high priority is how they were treated during the COVID-19 pandemic. The business experienced a shutdown for 6 weeks, when non-essential construction and residential work was halted. The company furloughed 180 workers, paying all their benefits and offering bridge loans to employees if they need assistance to pay bills. Ray personally kept in close contact with furloughed employees through nightly reviews about the shutdown, updating them about the status of work, and checking on how they were doing emotionally and financially. As business picked up, the company brought back furloughed employees. It is now in hiring mode to continue its business growth.

Isaac hires based on cultural fit. The company believes it can train field workers in the technical requirements of the job, and it created an internal training program, Isaac University, just for this purpose. One of the questions that Ray would ask job candidates is, “What habits do you need to get rid of when working for Isaac?” He was acutely aware that new employees often retained old habits from previous employees, and some of them were not in keeping with Isaac’s culture, such as not asking for help or not having fun or laughing on the job. Asking this question was indicative of the company’s commitment to its culture.

Regarding maintaining its culture, Isaac believes current workers are the best insurance against any weakening of its culture. Workers self-police each other, supporting adherence to the company’s cultural norms. In rare cases where this doesn’t work, the company’s leadership or Ray personally will coach the employee. Adherence to its culture is required for continued employment at Isaac.

The company supports community service in several ways. Employees are encouraged to participate in civic and charitable organizations, financially supporting these commitments. Ray’s father, Jim Isaac, became personally involved in donating equipment and services to build 120 homes for Habitat for Humanity over a 20-year period. And a percentage of the company’s annual budget is earmarked for donations and support of local charities.

One of the biggest challenges to the company is how to scale its growth while maintaining its culture. For example, Ray personally sends a birthday card with a handwritten note and gift to each of his 400 employees. He also sends out personal messages to any employee who goes the extra mile performing his or her job. Isaac is committed to continue these traditions as the company grows in employees and geography. 

What stands out about Isaac is not that it changed its culture but that this change was made by the same person who was responsible for much of the negative culture that had existed in the company. This dramatic turnaround offers hope that leadership development can play a crucial role in changing culture. Reversing an unhealthy culture begins with leadership. Ray was able to change his method of leading through self-reflection, coaching, and a strong desire to reverse the negative culture he had helped create. 

The change in culture has been acknowledged by employees and the business community. The company has continually been recognized as a great place to work. Turnover is low, and employee morale is high. Employees love working for the company and share in its success with job security, good wages, and profit sharing. Since its culture change, the company has grown four times in size, and its bottom line has kept up with its growth. Isaac Heating and Air Conditioning is a wonderful example of how a healthy culture is good for business.