Growth Culture: Building a Big Company by Winning Hearts and Minds

Sharon D. Virts, founder and CEO of FCiFederal, is betting the corporate culture she's instilling will vault her firm to the top of American business.

Riva Richmond By Riva Richmond

Sharon VirtsSharon D. Virts aims to break into the Fortune 500 — and says the company culture she’s building will get her there.

Virts is founder, CEO and sole owner of FCiFederal, an Ashburn, Va., contractor that does back-office work for U.S. federal agencies, from processing visas for the State Department to issuing fishing licenses for the Coast Guard. The company expects about $145 million in revenue this year, up tenfold from the $11 million it posted in 2010. At that rate, she could well realize her goal.

FCiFederal has grown rapidly thanks to a muscular strategy to oust incumbents on large federal contracts, which often involves assuming existing staff. Today, it has more than 3,000 employees, 85% of whom are women, in 43 states and two territories, mostly at government locations.

The world of federal contracting is notoriously tough. Indeed, Virts previously owned — and folded — a consulting firm that helped information-technology companies win federal contracts. She started FedConsulting in 1991 at age 29, fresh from a divorce and living in her brother’s basement. It prospered for a decade, but then struggled with increased competition and a shrinking market.

Virts, who began life in a house with a dirt floor, showed her guts and tenacity when she started over with FCiFederal. It took two years to land her first contracts, and she has chased wins ever since. Now, the mother of four sons, ages 14 to 29, has a very large “fifth child” on her hands.

The Story Exchange interviewed Virts when she visited New York City recently.

Edited interview excerpts below.

The Story Exchange: How did you land your first contracts? Did you get any benefit from being a woman-owned business?

No. [Two of the first three were] a limited competition in that only small businesses could bid, but there are so many small businesses in the world, you’re just one of many.

The key to it, in my mind, was writing not a “me-too” kind of proposal, but one that was bold and innovative and looked at things differently. And then pricing it aggressively. It wasn’t about making a lot of money; it was about getting that experience. I bid things at fixed price. It’s how we make all of our margin. We do it better and more efficient than you can.

We make statements in our proposals like: “It’s your mission over our margin.” We know that when we do that, it will reward us tenfold later because you trust us and we’re going to get the job done for you. I believe that customers measure value by how much expectations are exceeded. And that’s how you get those follow-on contracts over and over again.

One of the keys to that process is the people and the attitude of the people. You motivate those folks, and you let them know that what you do impacts people’s lives every day. We have a lot of big competitors [among them CGI Group, Serco, PAE and Lockheed Martin]. They all do [fixed-price contracts], but they don’t pay attention to the people side. That’s where we’re beating these guys.

The Story Exchange: I understand you have to absorb a lot of staff that you inherit.

We do. Most of it’s service-contract employees. Federal law requires that you have to offer all those employees first right of refusal with every contract that you win. You have to protect those jobs.

The biggest challenge that we always have when you grow like this is sort of an intangible thing: It’s the culture. We have this culture that we like to call “collaboration, engagement and ownership.”

It’s really tough when you inherit a contract with 1,000 people on it where there’s been a shame-based culture before. It’s sort of like beating your children: I was beaten when I was a clerk, I was beat up, told I was no good and I needed to do better, perform, perform, perform. And when I become a supervisor, I treat my clerks the same way in this sort of recurring culture of shame.

So it’s getting rid of that and preserving or instituting your own culture, because you get more from folks if you treat them with kindness than if you beat ‘em up. And so we spend a lot of time and effort and money on developing supervisors. And if they’re a “superclerk” and they have really no skills for supervising, we give them a “superclerk” job and then hire someone from outside to supervise that staff that understands our culture.

The Story Exchange: Are employees your biggest cost? Is that why they get so much focus?

We did a payroll analysis, and $75 million a year is our payroll right now. Then we have subcontractors we pay as well.

When I started my company, I couldn’t read a balance sheet. All the things I didn’t know, I’ve had to learn and become really good at knowing, because I spend all my day now managing risk and looking at those kinds of things. I love it. I do. What haven’t I thought of today that’s probably going to bite me tomorrow?

If I have one piece of advice for women trying to start their own business, it’s you have to know the details of your own business, you have to be involved. You can’t sit back and say: “Oh someone else is going to run it for me.” You have to take control of it, and that’s what’s making us successful in my mind. That’s why we are where we are. Because I walk that production floor, I do. And I can size it up in no time, and it’s because I live it.

The Story Exchange: What’s your growth plan? What’s your future?

We went from a small company to now a midsized firm. I want to make that Fortune 500 list someday. I’m not going to sell, not ever. We’re looking at some acquisitions right now to build capability where we don’t have it. It would take too long to home grow it, so I want to buy it.

We are one of the finalists for the U.S. Passport program. It’s a huge contract. We’d go from $150 million [in annual revenue] to $250 million overnight [and take on 1,200 to 1,500 new employees in 27 offices]. It’s huge. We’re also a finalist for the National Benefits Center, which is where all the citizenship benefits get processed, and that is another 1,200 to 1,300 people.

If I have my druthers, we’ll be at a run rate of $500 million in 2020.

The Story Exchange: What’s going to get you there?

It’s the culture emergence that makes the difference. When we first won the contract we have in Vermont [processing immigration benefits for U.S. Citizenship and Immigration Services, a division of the Department of Homeland Security], there’s work everywhere piled up on the floor. It’s a flippin’ mess! I believe my files on the shelves should be little soldiers saluting. Every file’s a person; respect that person. Everything that’s important to you is in that file, and they’re all over the floor, they’re everywhere.

I’m thinking, “Oh my God, how am I going to change this place?” It was the first time I was scared in a long time. I was reading a biography on Lyndon Johnson. I said, “I’m going to create a ‘hearts and minds’ campaign.”

I flew out to Vermont with trays of cookies, and I served all the employees. I said: “Take a cookie, share this cookie with me and tell me something good in your life. Forget for just a minute that you hate this job, you hate this place and you hate me, but tell me something that you’re celebrating in your life so we can celebrate it together.”

At the end of Hearts & Minds, I said: “Just as you share something good in your life, the best thing in [an immigration applicant’s] life is getting here to work legally or to be here legally or to have their loved ones here. Help them. Help celebrate them. Let’s clean this place up. Let’s do it right.” And they did.

The Hearts & Minds thing stuck. So every year, we go to as many sites as we can, and we serve them cookies.

The Story Exchange: Have you had any particular challenges being a woman?

Oh yeah. Which one?

I can be on a panel with three men, none of the men get the work-life balance question, but I always do. “How do you manage being the mother of four boys and also running a company?” Really? Are you going to ask him that? It’s no difference than what he would say. Running your own business is like having a fifth child. Sometimes one child gets more attention that the other one does. That’s how I manage it.

There’s a difference out there, and it’s OK. You play to the audience and you use all your capabilities, all your assets, to progress the ball to where you want to go. And if people underestimate me, then fine. I’d rather be a dark horse and people not know that I’m gonna come take that business from them than be the ones that they’re shooting after, the ones they’re pricing to. So far, it’s served us well.

The Story Exchange: Is there something special that it takes to take a business to this size as a woman?

First off, you can’t have any doubts. You can’t. I’ve told anybody that’ll ask me: If you’re thinking about starting your own business, if you’re thinking about doing this, you better look yourself in the mirror and have no doubts, none, that you can do this and you can succeed — that you want to do this. If you have any doubts, you’re going to fail. If you do, go talk yourself out of them, or you won’t make it.

You have to persevere. And you can’t let people tell you no. Never give up. You’ve got to be one step ahead. When things change, change with it. ‘Cause hanging on is the only sin.

I think a lot of women are really afraid to make decisions. Many of them hesitate, and they don’t trust themselves. They don’t trust their guts. That’s part of the challenge we have to get past. Look at where you’ve made your own decisions and they’ve been right and take confidence in that, and continue not to be afraid to make decisions.

And never cry. Never let ‘em see you sweat. Never. I never cry. I’m tough as nails.

The Story Exchange: You’re out talking to reporters. Is that a priority for you right now? Why?

Yes it is. I’m competing against companies that are known in the space and have an image and have a message. How are you going to compete with the big boys unless you act like one? You gotta be one.

I really want to put the real story out there, which is I think unique. We’re home-grown. I grew up in Leesburg, Virginia. I grew up in a house with a dirt floor. I have that blue-collar background, and I appreciate the kind of folks we have working for us. And I know we can take those workforces and make them dynamic and do wonderful things for our customers. That’s the story we want to talk about — the people part.

Posted: July 13, 2015

Riva RichmondGrowth Culture: Building a Big Company by Winning Hearts and Minds