Profit Sharer

Lito Alcantra’s generous compensation plan and hands-on management style has built Group Builders into one of the state’s largest contracting firms

April, 2007

Lito Alcantra, owner and president of Group Builders Inc., is a self-made man — twice over. A native of San Vicente, a rural village in the Philippines, Alcantra went on to found his own general contracting firm as well as serve as the dean of the college of engineering at a nearby university. When President Ferdinand Marcos declared martial law in 1973, Alcantra immigrated to Hawaii, where he took a job as a janitor at an insulation and drywall company. Within a year and a half, he was promoted to executive vice president of the company. In 1979, with $1,000 in his pocket and the financial backing of his former boss, Alcantra founded Group Builders Inc. The finishing contractor started with six employees. Today, Group Builders, which is ranked No. 114 on the Hawaii Business Top 250 list, has 450 workers and generated $75.4 million in gross sales in 2005.

On why he can’t remember when an employee quit his company to “pursue other opportunities.”
We give bonuses to people in the field twice a year, once in June and then again at the end of the year. These are based on performance. If the job makes money, we share. For our office people, those who don’t belong to a union, we give them profit sharing, 25 percent of their gross pay. That’s the maximum allowed by the law. They also receive a second bonus at the end of the year — we pay off any unused sick leave or vacation, which is four weeks apiece. That is why some people have $300,000 to $400,000 in their accounts. I did this from day one, so you can imagine why we grew from six to 450 people.

On why paying such large bonuses is good for business, despite what his banker says.
We are a finish contractor. We do the drywall, cabinets, exterior finish systems and plastering. These are some of the final stages of building and that is what everyone sees. We have to be on time, or the people who follow us can’t come. You have to share, because your employees will have the drive since they know that the money will come back to them. You have to treat people right. That is the bottom line. They won’t cheat you when you pay them what they are worth. Then they feel part of a team and if they cheat, they are cheating themselves. My banker told me that no one else gives these bonuses. “You’re increasing people, and you’re increasing pay. No one does this,” he said. But I say that it may be too much when you are losing money. But if you are making money, it is too low. I wish I could offer profit sharing at 50 percent. I am the owner but I’m also an employee, who works as hard as them. They [bankers] told me it is bad business. But the money isn’t mine. It belongs to the workers, they earned it. If you give them more, the more they give you. That is my philosophy. If I don’t give them, what can I expect? Nothing.

On why he still lives in a low-cost housing development.
In 1982, I had a big contract on Kauai, a development called Nukolii. They stopped the project, and I had all the materials there and it rotted. I had no money to operate. I used to live in a big house on Royal Summit and decided that it wasn’t meant to be. Maybe the Lord was telling me that I didn’t belong there. I asked the bank how much I owed. They said $300,000, so I said go and take my house. They said that was too cheap, but I continued my business and moved to Ewa. I bought my sister’s house. People always ask me why I don’t live in Kahala or Waialae Iki with all the money that I make. But the money isn’t mine and it can be lost so quickly. I live in West Loch, near three of my project engineers, so sometimes on Saturday or Sunday we go to someone’s house and drink and talk story. If you are close to your people, you don’t have any fence between you and your people. When you are close you can tell everything. But if you are alone they will be scared to tell you anything. I tell them I don’t want to hear the good points. I want to hear the bad points. Because the good points don’t hurt us. It’s the bad points that can hurt us.

On why he still drives a 1990 Toyota Previa van—for now.
Almost every day, I’m on the job site. On Mondays I fly to Maui, on Wednesday it’s Kauai and Friday I’m in Hilo. It is about touching the people, being there and eating with them. That is the key. People need a pat on the back, the boss letting them know that they are doing a good job. We have lunch and they tell me their problems. They have to know that you are concerned and they have to know that you know what they’re going through. Since I’m at the job site so often, I make deliveries [in my van]. It’s a daily thing. They call me direct. I wanted to buy a second-hand car to replace it, another Previa, but my CEO won’t allow it. We were going to a lunch to meet some Mainland suppliers several weeks ago, and the van broke down again, for the fourth time. He got so mad. He said that my life was too important to the company, so he was going to buy me a brand-new car. According to my controller, they did it. They won’t tell me what it is, or when I’ll get it. One day they’ll deliver it and haul the old one away.

On the final destination in business and life.
I was raised poor, really poor. My father only reached grade two and my mother is illiterate. They were always poor and always simple. When people get a formal education, they sometimes forget where they come from. If that happens, they will never reach the final destination. Give first before you get. I don’t think a lot of people think this way. The first thing many people do when they make money is to go buy a Mercedes Benz and show the world how successful they are. The destination is about giving, not receiving. I want to share my blessings and that is my happiness. I want to see the people who work with me happy. I want to see their families elevated, because I didn’t have that when I was growing up. The spirit of giving is with my people, and I am bringing up some people with me who will go on to upper management knowing this. In our meetings I emphasize that this company isn’t for me, it’s for us. That is our philosophy. That is the way we do business and that is the way we live. I hope that we can be an example, because this world is a very crazy world.

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