Securing a solid market niche

Whelan Security, family-owned for 60 years, is one of the largest
and fastest-growing contract security firms in the U.S.

By Sheryl Nance-Nash

From humble beginnings as a riverfront patrol company in St. Louis, Whelan Security Co. now provides contract security services to corporations, financial institutions, educational campuses, industrial facilities and others, in 20 states and Washington, D.C. It offers uniformed and special-event security, patrol and emergency response services, as well as investigations, consulting, labor response services, background screening and executive protection.

At a time when other security companies are merging, consolidating or being sold, Whelan celebrated its 60th anniversary in 2009. Despite the economic downturn, the company is expanding; revenues have tripled over the past five years. For 2009, Whelan projected a 15% increase in revenues over the $110 million it hit in 2008. That’s a far cry from the $150,000 the company booked in 1978.

Whelan hired more than 400 employees in 2009 and predicted that its workforce would surpass 4,000. Since 2008, the company has extended its reach to Wisconsin, Pennsylvania, Arizona and California. It plans to move on to Alabama, Florida, Georgia, Indiana, Iowa and Kentucky.

The secret of the company’s success, according to chairman Patrick Twardowski, 67, is its “conservative and fiscally prudent business strategy.”

His son Greg Twardowski, 43, the company president, adds with pride, “We are a risk-averse family. We always operated like we were in a recession.”

All the growth has been organic, and that’s been by design. Whelan has never made an acquisition. “Our competitors are growing through acquisition, but with acquisitions there can be a strain when you combine cultures,” Greg says. “Rarely do they mesh equally.”

Seeing the upside of the downturn

“We’ve been through ten recessions, each one presenting new and unique challenges,” says Patrick, nephew of company founder James T. Whelan. “But we’ve been fortunate that our clients, some who have been with us more than 25 years in St. Louis, believed in our promise and stuck with us through the ups and downs. If you think the sky is falling—the sky is falling. We do not believe the sky is falling, and our glass is overflowing. We plan to increase market share while times are tough.”

“I’ve never seen as much opportunity for my company as I see today,” says Greg.

In a recession, weaker businesses can fail, and when they do, their customers need a new supplier. Whelan has been scooping up these orphaned clients. Nonetheless, according to Greg, Whelan hasn’t been totally recession-proof.

“There is significant concern about customer sustainability,” Greg notes. “Five major customers filed bankruptcy [in 2009]. We are monitoring the financial strength of our customers and are managing cash flow and receivables appropriately.”

Greg’s brother Dan Twardowski, 40, vice president, points out that the company’s expansion mitigates its dependence on any one market. But while Whelan is growing rapidly, the growth has been controlled. “We could be growing at 35% a year, but we’re not, because I don’t want to incur debt,” Greg says. “We have virtually no debt, and I prefer to operate with a strong cash position.”

‘Truth Report’

Whelan uses a proprietary performance management tool called the “Truth Report” to assess key performance metrics—such as the staff’s professional appearance, billing accuracy, training frequency and inventory control—to measure the company’s performance and the client’s return on investment. The Truth Report, which according to the company includes positive and negative performance data, helps Whelan address any areas that, in a client’s opinion, need more focus.

On a monthly basis, the Whelan project manager at each site compiles the data and presents the information to the client. Each site project manager has first-line accountability for quality performance and problem resolution at each location. Once a quarter, an average score from the previous monthly reports is tabulated, and the Truth Report is delivered to the customer with backup documentation supporting each section. In most cases, a member of the Whelan executive team attends these quarterly review meetings to analyze and discuss the previous quarter’s performance and to identify areas for improvement.

Whelan also has developed an employee training program and offers professional development opportunities through classes, self-study programs and an interactive e-learning academy. Training program topics include first aid, emergency response and customer service. Dan says the focus on employee training and retention has been among Whelan’s smartest moves because it has helped build brand identity and establish the company as an employer of choice.

Maintaining a family feeling is a bit more of a challenge now that the company has thousands of employees. “We work hard to keep that same culture that helped shape the company from the beginning,” says Dan. He says small things are key. Employees are given a card that they are asked to carry with them at all times. The card contains the company’s core values: what Greg calls “good, old-fashioned Midwestern values, like truth telling, transparency, promise keeping, respect, consideration and loyalty.”

“The cards remind us, if necessary, of why we are doing what we are doing,” Greg explains.

“As a leader, you have to constantly engage in discussions with your employees,” says Dan. “That is why we put such a strong emphasis on the character and work ethic of our senior and branch management teams. It is their job to instill our organizational values and philosophies. We firmly believe in the inverted organizational chart, which puts our employees in the field at the top of the organization and the senior management team and principals at the bottom. Our senior team supports the regional team, which supports the branch team, which supports our most important asset—our security officers. If there is a weak link anywhere along the line, our mission is compromised.”

Line of succession

Patrick Twardowski was working in a human resources post at McDonnell Douglas in 1969 when his uncle, who had founded Whelan Security in 1949, passed away. Patrick’s aunt, who had no children, asked him to invest in the company and assume management responsibilities. At the time she had three options: close the business, sell it or attempt to keep the business operating. She reached out to Patrick. “The company was still relatively young when I came aboard,” Patrick recalls, “and I didn’t give much thought to joining until my aunt presented the opportunity to me.” He became president of the company in 1978.

Greg joined Whelan in 1989. He had worked as a transportation coordinator for a commodities wholesaler in St. Louis for a year following his graduation from Wake Forest University with a degree in business. Dan joined in 1991 after graduating from Rockhurst University in Kansas City with a dual degree in finance and economics.

Greg succeeded his father as Whelan Security’s president in 2003, after nearly 15 years with the company. “I kept thinking there was more to what Dad had created,” Greg recalls. “We were able to take what Dad created and parlay it into what it is today. Our vision was to serve our clientele—companies like Pepsi and GE, [which had facilities] in St. Louis—to also begin to serve them in their locations outside of St. Louis.”

By the time Greg became president, the company had added key executives, including executive vice president and COO Prentice Robertson, who had worked at Barton Protective Services in Atlanta. “I knew the company would be in good hands,” Patrick says. “And when I see what we have achieved since then, I was correct.”

Greg describes himself as the one with a vision for the company, who is adept at developing strategy, financial management and customer relations. He leaves other responsibilities to those who can better handle them, he says. “I hired to my weaknesses and, fortunately, assembled an industry-leading executive team,” he says. Brother Dan concentrates on strategic decisions and manages the mid-central region, which includes the flagship office in St. Louis.

Today, Whelan’s four legal entities—including a subsidiary, TransNational Security—are owned by Patrick, Dan and Greg; the division of ownership of the different entities varies among them. Robertson is the only non-family principal.

Patrick, now the company chairman, is still active in the business and will come in the office in coat and tie, but these days he also spends much of the winter in Florida.

Patrick has one lament. “Significant free time is not something that generally comes with a family-owned company, especially one that has grown as quickly as Whelan has over the last 15 or so years,” he says. “But my family has always been understanding, as have Greg and Dan’s wife and children. They know what managing a company like Whelan entails and they’re very patient and accommodating. All three of us have been fortunate to be blessed with wives who are supportive of our schedules.”

Maintaining momentum

What are Whelan Security’s prospects for the future? “We are as optimistic as ever,” Patrick says. “We are busy contacting prospects to pitch our services. The troughs of the economy are out of our control, so we have to look at what we can control, and that’s brand, reputation, quality of service, quality of client relationships, customer service and employee development. We also must strive to find innovative and cost-effective solutions for our clients.”

Of course, there are challenges ahead. “We must sustain and maintain the momentum we’ve created,” Greg says. “We want to continue to expand and parlay existing relationships. The next three to five years, I think, we will continue to grow at a minimum of 15% a year, [and] continue doing it organically. We will remain a quiet, humble, Midwestern family business.”

The family’s goal for the company is simple, Patrick says. “It’s about continuing what my Uncle James began—building a security firm people can trust,” he says. So far, with a strong management team and a family of more than 4,000 strong, we’ve been able to do just that.”

“Greed doesn’t need to get in the way of business,” his son Greg asserts.

Sheryl Nance-Nash is a freelance writer based in Long Beach, N.Y.