Passing the Torch
Sharad Madison and his twin sister, Sharon, carry forward their father’s legacy at United Building Maintenance Corp.
October 2002 was a monumental year for United Building Maintenance Corp. The company had just been awarded a $6.6 million contract by JPMorgan Chase to provide janitorial services to its 23-story, 575,000-square-foot tower at 522 Fifth Avenue. It was the first time a minority-owned cleaning company in New York City had been awarded a contract to service a Class A commercial property as a prime contractor. Fast-forward two years and United would be dealing with another significant milestone. This time, the mood was somber as the corporation confronted the loss of its CEO and founder, Oliver Madison. Compounding the grief were the legalities and high costs associated with buying out the firm’s partners, The Bressler Group, which owned 48 percent of the company. Today Sharad Madison, Oliver Madison’s son, sits at the helm of United Building Maintenance. As the 43-year-old Sharad guides the company through the competitive commercial cleaning landscape, he incorporates the business principles instilled by his father while leaving his own signature in business leadership.
It was 1959 when 21-year-old Oliver Madison started his job as porter for National Cleaning Contractors Inc.— the largest cleaning company in the country at the time—to provide a living for his wife and children. With less than a high school education, Madison would eventually rise to the rank of vice president. In 1991, after 32 years working for National Cleaning Contractors, Madison, a cautious man, embarked on a bold mission. Hearing that his company would be relinquishing a segment of the business it considered low margin, including the portfolio he managed, he attempted to acquire some of the accounts that were up for grabs. Madison had just 30 days to secure the funds.
“He had the option to use his own capital, but the thought process was, Does he take his life savings that he’s worked for all these years to start the company or does he defray some of the costs using OPM (other people’s money). And he decided the best way was to get investors,” says Sharad Madison.
Within a month, aided by his reputation as a man of character, Madison had received $250,000 from investors with which to launch his own janitorial company. Despite his experience in the cleaning industry, however, many of National Cleaning Contractors former clients were reluctant to do business with this new, smaller, minority-owned building-services contractor. Madison lost significant business.
But amazingly, by the end of the year, he had turned a profit. Now, 15 years later, with $20 million in billings and 400 employees, United services 320 locations throughout the five boroughs of New York City. Its major clients include The Bank of New York, Met Life, Teachers Insurance, The College Board and JPMorgan Chase.
“Being a minority-owned business that has amassed scale to handle JPMorgan Chase is an important characteristic to being a viable, sustained supplier. To clean our branches we look for firms that can clean multiple branches at once,” says Harvey Butler, vice president of supplier diversity for JPMorgan Chase. “United Building Maintenance Corp. has been able to differentiate themselves by handling small projects years ago, and eventually amassing scale to handle the services of JPMorgan Chase while providing a quality cleaning service at competitive rates.”
United is competitive largely due to Sharad Madison’s tight control of operating costs. “We don’t hire people if we don’t need them. We don’t create departments. We’re not foolhardy about how we manage the company. We never have been,” he says. Although Madison runs a lean machine, labor costs are still the company’s biggest expense. “Payroll is substantial; it’s a constant pull,” he says. Wages and benefits are dictated by the union and the amount of time an employee has been a member of the union, but Madison controls the reins on hours worked by his cleaning staff, determining if a job can be completed in a shorter time with less manpower.
According to Marketdata Enter-prises, a market re-search firm that publishes studies on the service industry, employee turnover in the cleaning industry is about 30 percent to 40 percent. But Madison’s employees are unionized, so United has a high employee retention rate. “There’s a general vantage point that the union plays. It adds stability. They [United’s employees] get paid a nice living wage, an average of $18 an hour, health benefits, pension,” says Madison, adding that the company’s substantial growth has made an already satisfactory relationship with the union even better. Recently, for example, the union apprised United of a cleaning company that was in bankruptcy, asking if United was interested in bidding on it because they wanted the company to be purchased by a strong, solid company with which they had a good relationship and not by a nonunion contractor.
Its huge growth in size has not reduced United’s need to drive volume. Madison contends that cleaning companies operate on minuscule profit margins of 2 percent to 3 percent and, to expand his business, he is diversifying by offering special services such as construction cleanup, water damage restoration and restroom upgrades. Such services can generate profits of 10 percent to 20 percent. “Our long-term vision is to be a strong regional player and to use our current customer base to execute our growth plan because those people who already use our services are likely to vertically integrate their company with other services,” says Madison. Having proven himself in the commercial arena, he is now investigating the government contracts, he says.
“While it’s impossible to fill a man’s shoes, you can have his vision,” he states as he glances at his father’s eyeglasses, lying on the side of his desk. To him they are a reminder of what Oliver Madison wanted for United and his family.
Sharon Madison, vice president of the company and Sharad’s fraternal twin, contends that her brother came into his own when their father died. “He was successful in bringing in business and really cultivating and maintaining the prior relationships and new relationships that we [United] had while Dad was alive,” she says, noting that the company has not lost any business since her father passed. “A lot of companies would be hightailing it out when the patriarch leaves, and they didn’t. Sharad has been able to fill Dad’s shoes as Sharad.”
Since 2002, when Sharad Madison quietly assumed the role of president, he has carried out his father’s wishes, buying out United’s partners and servicing Class A real estate properties. In February, Uni-ted received the Outstanding Minority Business Award from the National Minority Business Council (NMBC). John F. Robinson, NMBC’s president and CEO, says United was selected because it is a second-generation African-American-owned business. Moreover, “the reason we thought they were such a great awardee is that their business is growing and they have diversified their client mix,” says Robinson. He notes that United started out with just one customer when Oliver Madison started the com-pany and now has a client base of multiple companies under the leadership of his son, Sharad.