New leadership, familiar values! - interview with key people from MERKBAU

As we mentioned in our previous news item, from 1 September, a new president, József Knáb will head the Board of Directors of Merkbau Zrt.. The membership of the Board of Directors has also changed somewhat since the previous board's term expired. We spoke with the new chairman, József Knáb, and the three founding owners, Jakab Merényi, János Knáb and László Balanyi, at the company's headquarters in Kiskunhalas.

"New leadership, familiar values!" - this became the motto of the change that took effect on 1 September at MERKBAUN. The first question was therefore which basic principles and motivations remained unchanged in each chapter of the successful history of the company, which has been going on for decades.

These core values have been in place for three decades

Jakab Merényi traced the answer back to the company's beginnings, recalling that all three founders worked at the construction company KUNÉP in Kishunhalas until 1990. "It was a well-established company, but it could not cope with inflation above 30 percent at the time of the regime change," he recalled. In 1990, using their experience abroad and the tax breaks available, they set up a German-Hungarian joint venture, which successfully exploited the opportunities offered by the German market.

The aforementioned years in Germany played a decisive role in the development of the MERKBAU. "Due to a lack of references, we were initially working as subcontractors in Germany, but then we made progress thanks to successful projects." Jakab Merényi stressed that this success has enabled them to keep their promises to their employees and to transfer the workforce they had employed abroad to the new jobs they started at home.

Success in the German market has laid the foundations for domestic success

Both the revenues and the experience in Germany were necessary for the company to start up in Hungary after 1993. "On the one hand, we used the capital we had raised abroad to buy the equipment we needed to get started. The other factor was expertise: we used to say that people who had worked with us for several years in Germany had acquired another profession within their own field. And this has enabled us to achieve a very high quality of workmanship in our Hungarian projects," says Jakab Merényi.

József Knáb added that another advantage of the German involvement was that, in addition to the language skills acquired, they got to know the German way of thinking, which focuses on meeting deadlines and high quality.

It's no coincidence that the MERKBAU has won major German industrial projects throughout its history. Among these, János Knáb pointed to the first time they worked on the Audi project in Győr in the early 2000s as a milestone. "This project helped us to a great extent to change our scale. We learned how to work with international partners and also how to solve major technical challenges."

They are geographically and sectorally diversified

Another core value of the company, which has been a core value over the years, is to have more than one foot in the door, both geographically and sectorally. "We have a presence in Germany to this day through Halasbau Kft.; at the same time, we have been trading since 1995 and operate four building centres nationwide, as well as being part of the newHÁZ building materials trading network." Jakab Merényi added that in 35 years, there have always been times when one leg of the company has been weak, but the other areas have always helped it out.

MERKBAU baselines also helped in the selection of the new President

In addition to all this, László Balanyi also set out some other core values: "Predictability, reliability and people-focus have long been our values." He added that the fact that József Knáb's core values overlap to a large extent with these values weighed heavily in the selection of the new leader. "That is why we have been able to work successfully with him for more than 30 years. It also gives a sense of stability alongside the renewal brought by the new leadership."

The company has always pursued a strategy of restraint, avoiding too steep a growth path, while at the same time pioneering in many areas. Also, the management has always been open to suggestions from the bottom up, and in many cases it has been the employees' innovations that have driven the company forward.

Accurate performance thus met the same values

One of the foundations of their strong market position is that they have become a recurring partner for private investors in many cases, including large companies such as Siemens, AUDI and even Rosenberger.

József Knáb put the essence of this as punctual and quality performance met the same values on the other side. "If it worked once, it will work again," he said. "Of course, you have to win the race again and again, and for that you need good conditions and a good price."

The innovation process started with the new generation

During the interview, János Knáb also mentioned 2018 as a milestone, when they decided to transform from a limited liability company into a limited liability company. "This was a crucial step in the generational change," he explained. "The creation of the related corporate governance structure has contributed greatly to the successes of the past years."

He added that 2018 is also a milestone, because from then onwards, work will continue on the succession issue and the related separation of ownership and management activities. János Knáb also revealed that an independent expert has been hired to plan the generation change.

The generational change has not only started at the planning level

Another important element of the process was the family constitution mentioned above. Jakab Merényi explained that the constitution, which sets out the principles and values of running the company, was developed by the founding owners together with their children, who have been working in the group for years. "During the discussions, the young people asked for the group to be unified and for MERKBAU to become a public limited company," said Jakab Merényi. The next generation therefore has an important role to play in the process of renewing the group.

That the conscious generational change has not only started at the level of plans is also shown by the fact that as a result, five of the seven children of the three senior founding owners are now working at MERKBAUNa, and two have joined the Board of Directors.

How governance has been renewed: less tradition, more regulation

László Balanyi pointed out how the unity and regularity emphasised by the young people have been achieved in the renewed organisational form. "Our aim was to make things easier for both our successors and newcomers, i.e. to make it easier for them to find their way around the management. There was a very legitimate demand from our successors for more and more things to be regulated. I would sum up the change as less tradition and more regulation." The public limited company form also helped the transformation by allowing new board decisions to involve the new members in the collective thinking at group level.

János Knáb added that the joint development of the new framework was also very important because the seniors' goal was that the juniors' involvement in the company's management processes should not be a mandatory, predefined element, but should be based on their own decisions and preferences. "The aim was to give them more freedom to think about their personal destiny."

This is how gradual and organic change works

In connection with the above, József Knáb, who will take up the position of President on 1 September, pointed out that the generational change is not over yet. "I am 5 years younger than János and 16 years younger than Jakab, so my appointment is not a generational change. In the same way, there is a mix of younger and longer-serving colleagues in management. I think that this gradualness gives us the chance for a successful transition, as it allows change to happen organically, which has always been a feature of our company."

János Knáb added that one of the main objectives of the current restructuring of the Board was to ensure that the Board was no longer chaired by a senior owner, and this has been achieved.

However, organic development is also indicated by the fact that the membership of the Board of Directors has not changed in the new term, with the exception of two seniors, László Balanyi and János Knáb, who have been transferred to the Supervisory Board. "In addition, we will continue to visit the workplace and participate in certain work processes as consultants," said László Balanyi.

Employees also gave feedback that it was a good decision

As we reported in the wake of Monday's announcement, József Knáb took over as Chairman of the Board of Directors as one of the key figures of the Group: he started his career at the company as a university student and was part of and co-creator of almost every important milestone. His role is also reflected in the fact that he has been a key member of the Board of Directors of MERKBAU Zrt. since the 2020 transformation.

Jakab Merényi stressed that the election of József Knáb was a completely unanimous decision. He added that the recognition he received from his colleagues was due to his diligence, perseverance and results-oriented approach, as well as his good team-building skills and achievements in managing the business. "These were the reasons why many people considered it a natural choice for him to become Chairman of the Board," said James Merényi.

The founding owner also revealed that after the election of József Knáb, he asked the new president for an appointment and gave him a list of 13+1 items. "I summarised my experience in running a company and my top tips in the list. I also offered to ask for my opinion at any time. It helped me a lot when I was running the company to ask for someone's opinion."

The decision itself is a huge motivation

As part of the interview, we asked József Knáb for a small insight into his career, motivation and goals. First of all, he pointed out that he started his career in the group in Germany: the work ethic and experience he gained there is still important to him. Since 2010, he has been increasingly involved in the contracting area, and since 2018 he has also been involved in strategic decisions.

Among his main motivations, he highlighted the fact of his appointment itself. "I saw this decision first and foremost as an expression of the trust I have shown in my previous work. This trust is also a great motivation for me."

As the foundation of his approach to leadership, he revealed that a results-oriented approach is central to his vision of work. It is also a defining element that he prefers honest relationships based on mutual trust, coupled with humane communication. "If you can develop this relationship with colleagues, whether internal or external, it can make collaboration incredibly effective. Colleagues who have been with us for a long time know me well and know that it's worth being open and trusting, because that's when we can get things done most quickly."

There is room for improvement in efficiency

As for the objectives: the main directions he has taken as chairman are largely determined by the fact that József Knáb has agreed with the owners on a detailed set of business objectives.

He added that one of the indicators of efficiency could be the turnover or profit per capita. "In this respect, there is room for improvement in the sector." He also highlighted the importance of strengthening adaptability to a rapidly changing market environment.

He also explained that values are the greatest help in achieving the goals set. "I am convinced that this is the company's greatest asset. Among these values, the belief in hard work and fair market conduct also stand out."

You have to step on the gas more

The three seniors were also asked to help define the group's objectives and strategy in the current market conditions at the end of the interview. Jakab Merényi said that they will probably have to step on the gas more, but that this should not be an obstacle for young, capable managers.

László Balanyi also stressed the increasing lack of demand, which he does not expect to change in the next 1.5 years. "So the main task is to maintain liquidity, a kind of survival mode, and of course to preserve capacity as much as possible so that we can react quickly to projects in a period of growth."

János Knáb is confident that the difficulties affecting the sector to a large extent will soon ease. "We need to adapt our capacity to market expectations. I think it is important for the construction industry to move into the field of prefabrication, and we are trying to be part of this in many respects. The replacement of skilled workers, the decline in the craft skills of construction workers, is perhaps the biggest challenge for our company, and one that is likely to remain with us beyond 5 years."

If I had to condense it into one sentence...

To complete the interview, we asked four key leaders in the history of the group to summarise in one sentence what Merkbau means to them.

József Knáb: "Passion."

James Merényi: "The better half of my life."

János Knáb: "Colleagues, friends, community"

László Balanyi: "Second family."