Title: Chief Financial Officer
Company: ILLCO Inc.
Location: Aurora, Illinois
No. of Branches: 8
No. of Employees: 95
Year Founded: 1929 (current ownership since 1973)
Question: When and why did you decide to make the HVACR industry a career?
Karen Madonia: While I always knew I would end up working in our family business, my dad, Jay Glass, told me early on that I needed to work somewhere else for a while before joining. I didn’t really understand his reasoning at the time, but now, I’m very grateful that he took that stance. He wanted me to get some experience that would bring something different to the table, so I worked commercial banking for a few years and then went into private equity. I loved both jobs, but it got harder and harder to do justice to the time and effort that private equity took once I had children. I came into the family business about a year after my third daughter was born and was allowed to start slowly, so I had the flexibility to be home when my kids left for school and when they returned. Having that work/life balance is absolutely necessary for working women, and I’m grateful that my dad understood that.
Q: Give us some background about your education: What was your favorite course, and what was your least favorite?
Karen Madonia: I graduated from the University of Illinois with a bachelor’s degree in finance and then from Loyola University with an M.B.A. in finance. I guess I would have to say that those finance classes were my favorites, since I kept signing up for more of them. Least favorite would have to be Speech Communications. I have never been comfortable speaking in front of a group and would stress for days before I had to give a speech. In retrospect, I should have embraced that challenge and risen above the fear, but hindsight is always 20/20.
Q: If you could make one change in your relationships with manufacturers, what would it be?
Karen Madonia: Our company philosophy with respect to our vendor relationships is that the better partner you are, the better partners you’ll have. For us, it’s not a situation of someone having to lose for us to win —we think that the best partnerships are those that result in wins for both sides. While most of my relationships with vendors are on the banking and insurance side, I’ve always tried to hold true to that basic premise —both sides of a business relationship have to win in order for it to be successful. We have a great purchasing team here at ILLCO, and they work hard every day to prove our value to our manufacturer partners. I can’t think of a thing I would change there.
Q: If you could make one change in your relationships with contractors, what would it be?
Karen Madonia: Unfortunately, I have the most contact with our customers when there is a credit concern, which is really not the best time to get to know them. So I guess on a personal level, it would be nice to have some more positive, less-stressful interactions with customers. But as a company, we have the same philosophy toward our customer relationships as we do toward our vendor ones —we want them to succeed. We try to be great partners by providing top-quality equipment, parts, and supplies on time and at fair prices, and by knowing as much as we can about their businesses and markets, we can be a good resource for them as they grow.
Q: What outside interests do you have that perhaps few people know about?
Karen Madonia: I’m going to sound pretty boring here, but my interests pretty much revolve around what’s going on with my family. We’re a very tight-knit group, and there are enough of us that someone is always doing something that piques my interest. Between the three of us, my sisters and I have eight kids, and we’re winding down the college years. They have gone in all different directions, and it’s been great watching them make the choices that start to define who they will become as adults. Right now, I have one daughter studying abroad, one who just returned from a stint in Los Angeles, and one who is newly engaged, so my interests have been planning a trip to Ireland, helping in a job search and planning a wedding, respectively.
Q: Is there a business leader, or someone from any discipline or profession, whom you admire and even try to emulate?
Karen Madonia: I’m fortunate to have two leaders whom I admire very much in my own company. My dad built ILLCO pretty much from the ground up and instilled within his family and his employees the work ethic that prevails here today: Dream big, work hard, be honest and ethical in your relationships and transactions, and treat everyone who crosses your path with respect. And my brother-in-law, Bill Bergamini, who leads ILLCO today with those same core values, has taken every challenge over the last few years and turned it into an opportunity. Both are amazing leaders, and I feel blessed to be part of their team. If I’m looking outside of our company, I would have to say that Blake Mycoskie, founder of Tom’s (www.toms.com), has to be one of the most inspirational business leaders of his generation. Anyone who doesn’t know much about him should read his book, Start Something That Matters.It will change the way you look at your business.
Q: What do you feel will be the greatest challenge to the HVACR industry in the next five years?
Karen Madonia: In addition to the challenges that all businesses face with increased regulation and tax uncertainty, our industry, in particular, has a couple of unique challenges. First, it seems that we’re affected by everything the U.S. Environmental Protection Agency (EPA) and U.S. Department of Energy (DOE) do these days, and that makes it hard for our manufacturers to make long-term production commitments and for us to manage our inventories. Fortunately, we have HARDI and a few really committed members who fight the good fight for us with those agencies year after year. Second, we have to be concerned about the future of our channel, given the ease of Internet sales. Anyone can sell most of what we carry, but not many people can provide the expertise needed to help design systems and finance purchases like wholesalers can. If it becomes just a matter of chasing cheap prices, it’s hard for independent brick-and-mortar distributors to compete. We need to continue to prove that our products and services are superior to anything found elsewhere and that our people have been trained and educated on how to best use them. Internet sales are a slippery slope for us, and it would be dangerous for the distribution channel to underestimate the threat they pose. We have a say in what happens to our channel, and we need to speak with one voice if we’re going to persevere.
Q: What was it like testifying before a congressional committee? How did that come about?
Karen Madonia: I’ve had the privilege of testifying before two Congressional subcommittees and participating in one press conference on the estate tax, all through HARDI. It’s an issue that is very important to me, especially as our family business transitions from one generation to the next, and I guess HARDI felt that as a part of the Government Affairs Committee, I was a logical choice to make our case in Washington. Given my aversion to public speaking, it was the hardest thing I have ever had to do. But it was an honor for me to get to tell my dad’s story of struggling to build a business for the first two-thirds of his life, then struggling to figure out how to keep it intact as he tries to transition out of it in the last third. I’m grateful that I had the opportunity to make the case that the estate tax is fundamentally unfair. I am indebted to Jon Melchi and Palmer Schoening for being with me every step of the way, cheering me on and making sure that I didn’t embarrass myself too much.
Q: What book are you reading? Why did you pick it up?
Karen Madonia: Right now, I’m reading The Martian, by Andy Weir. I have three daughters who are big readers, so most of the novels that end up on my nightstand are ones that they have read and recommend. Saves me a lot of time.
Q: What do you do to relax?
Karen Madonia: I spend most Friday nights drinking wine with a couple of very good friends, and it’s the most relaxing part of my week. Between my mom, sisters, daughters, and girlfriends, I am surrounded by an energy and understanding that really props me up. The wine doesn’t hurt, but it’s the bond that women share, borne out of our common experiences — and our hopes that our children prosper while minimizing their mistakes — that really helps us support each other through just about everything life throws at us.
Q: The perception is that the HVACR industry, especially on the management side, is male-dominated. What do you say to women who might be taking their first steps in the HVACR business?
Karen Madonia: This is a male-dominated industry, for sure, but I have always found it very welcoming. The key for me was to get involved in HARDI. From the time I attended my first HARDI event, I felt like people were truly interested in my perspective and really rooting for my success. This is a great industry filled with great people; just get out there and start meeting them.