Handing Over the Reins

Ulf Wolf / January 2019

Many of you have spent a significant part of your lives planning, creating, nursing, growing, consoling, celebrating, aggravating over (kept up at night by), directing and managing this rambunctious baby known as “The Company.” And now, you realize that one day (soon or not-so-soon) you will have to hand the reins over to someone else.
    
What does this involve, and what should be uppermost in your mind at this prospect?

Priorities
We turned to some members of the Association of the Wall and Ceiling Industry, and this was our first question: What should be the top priorities when planning succession? Many agree that starting early is key.
    
Howard Bernstein, president of Penn Installations, Inc. in Pennsylvania, puts it succinctly: “Start now. Follow the lead of others in the industry who have successfully accomplished this task. Start now.”
    
Robert Sutton, a Texas consultant and owner of Sutton Inspection & Consulting, LLC in Texas, agrees, “Start early: You can never begin the process too soon.
    
“If not a family organization, you should ask what the future holds for the industry and whether there is someone inside your company who could navigate the company into that future.
    
“If it’s a family organization, it’s very important to ask who actually wants this responsibility.”
    
Suggests Fritz Reitter, president of Reitter Stucco, Inc. in Ohio, “Start early. We have found that succession is a process and not an event and takes much longer than you think.
    
“Then, if not already done, write a job description for the successor and establish a hand-over date. Based on that, identify training needs and establish a timeline.”
    
Gabriel Castillo, director of business development at Pillar Construction, Inc. in Virginia, also says to start early: “Don’t wait until ownership is about to retire. Brew and groom successors from within, someone with shared values and vision. Make sure you have structured procedures. The processes in the company should transcend the person who created them. Create order that has no dependency on ownership.”
    
Says Craig Daley, president of Daley’s Drywall & Taping in California’s Bay Area, “Make the right hires. If you don’t see someone in your organization capable of running it like you do, or better, you haven’t made the right hires.
    
“Then train them. Expose them to every part of the business so they are well rounded—until they make correct decisions without you.
    
“Once hired and trained, hand over your duties one at a time until you have none left to turn over. That’s when you can feel good about handing over the keys.”
    
Adam Navratil, partner/CEO of J&B Acoustical, Inc. in Ohio, says this is what you need: “Total buy-in from all stockholders, early planning, and make sure the correct mentors are in place to advise when needed.”
    
John Kirk, owner of Kirk Builders in California’s Bay Area, has this to say: “I would want to make sure that I’d leave the company well organized, almost self-operating, and that I don’t leave any surprises such as a hidden debt.”
    
Advises Gene Cox, president of Custom Drywall, Inc. in California, “You need to figure out how you can get the money out for retirement, especially if a big portion of your wealth is tied up in the company. Also, you need to work out how to safeguard the company’s good reputation.”
    
Phil Ruffin, president of Pontiac Ceiling & Partition, LLC in Michigan, views it this way: “Choose your possible replacement or replacements years prior to your anticipated departure—you have to look into the future and create a path for individuals who you anticipate would be the best to replace you.
    
“That done, training is paramount. Provide challenging responsibilities and monitor results to determine whether he or she is the right person.
    
“Once ready, create a financial path for the individual that will motivate and ensure their success.”
    
Suggests Charles Antone, consultant at Building Enclosure Science in Rhode Island, “The first step, as the owner, is to sit down and write down an exit strategy—this could mean sell, pass on to children, pick a successor, transfer ownership over time or through a sale, etc. Once that’s worked out, form a business continuation plan detailing how the business will sustain itself should you, say, be hit by a bus.
    
“And don’t forget, a key question is, ‘Does the successor want to be a successor?’ That is key—really key.”
    
Advises Art Trautman, principal of Sonora Drywall in Arizona, “Set a clear direction for the company, both prior- and post-departure; ensure your company has a professional image; document a clear set of policies that have worked for you to guide both the transition and future operations.
    
Mike Heering, president of F.L. Crane & Sons, Inc. in Mississippi, suggests involving the “person or persons who will take over the business as early on as possible—to learn and understand all aspects of what the company does and what it stands for.
    
“Let them take on various task to teach them how to do the things that make the company run, and once they have a firm understanding of the business, you should begin delegating some of the important tasks to them. Keep this up until they are comfortable executing such tasks and are ready to take on all aspects of running a successful business.”
    
Scott Bleich and Scott Turczynski, principals at Heartland in Iowa, look at priorities from the standpoint of selling the company and would set these criteria: A buyer must align with their company’s  culture and core values, must have excellent leadership and must be financially capable of purchasing the company.
    
Offers Greg Smith, executive vice president of Superior Wall Systems in California, “Ideally, you want to find someone who is as passionate about the business as you are. Things can be rough at times, and passion is what carries you through when you want to throw your hands in the air.
    
“Also, you need someone who can think through situations all the way to the end and reach full, well-thought-out decisions, someone who is strong enough to then stick with those decisions but flexible enough to modify them as and if things arise or change.”

Time Frame
At which point should you start planning your succession? Many of the contractors we interviewed, including Navratil and Trautman, say five to 10 years, but others had different opinions.
    
Emphasizes Bernstein, “Start now. Don’t think that you will figure this out later as the process will not happen overnight, at least not successfully. And realize that just as your successor can learn from you, you will learn from him or her.”
    
Suggests Daley, “Start five years ahead of exit date, as it takes longer than you think to expose your successor to everything you do.”
    
Smith says five to 10 years is a good timeline, but “sometimes you don’t get that kind of time. You need time to see how your potential successor handles big decisions. Is he or she calm and calculated while arriving at the right decision? Are all in the company embracing him or her as an emerging leader?”
    
Kirk’s time frame is slightly shorter. “About two to five years prior to handing the company over,” he says.
    
Cox says it’s time “when you have enough to comfortably retire in the manner that you want to retire, and when the business isn’t enjoyable anymore.”
    
Suggest Ruffin, “Once your financial goals as well as your ‘I-want-to-be-out-by’ goals are set, you work backward from that date. This process of choosing, training and planning can take anywhere from five to 10 years. The sooner you set these goals and create these paths, the more flexibility you will have.”
    
Says Reitter, “The earlier, the better. It is a long process, not an event, so even if your plan to move on is 15 to 20 years out, it is prudent to plan now.”
    
Quips Richard Wagner, owner of RWE – Richard Wagner Enterprises, LLC in North Carolina, “For me, after my first heart attack. For someone who has not developed an exit plan: Start today.”
    
Says Heering, “I think you should start as soon as you feel that you have identified the right person for the task.”
    
Bleich and Turczynski both say the planning should start on day one of the company.

Choosing
How would you choose a successor?
    
Bernstein says to be open minded because “the next generation and the one following are so very different from us. Don’t expect to find someone who looks, acts and thinks as you do. That said, hard work and honesty should migrate from one generation to the next with the right candidate.
    
“If you find those qualities in a young person, there needs to be a leap of faith to some degree, understanding that their methods are probably going to be quite different from yours. If the results bear them out, give them space to make the changes they believe in.”
    
Suggests Sutton, “The individual must be, or learn to be, a person of the people. Effective leadership starts with communication; it is key when holding a position of authority. The employees need to respect and trust the incoming leader—they want to know things will continue well and possibly even improve over time.”
    
Gary Dillman, CEO of Baylor Construction, Inc. in Florida, points out, “Find someone who is in line with your values and your morals, your likes and dislikes. If you don’t really gel with them, it will not work.”
    
Observes Cox, “Sometimes, as with me, it’s a family member or close employee who has helped to run the business. It has to be someone you trust because you need to finance the money over a number of years for them to buy you out.”
    
As Ruffin sees it, “Choosing a successor from within should be your first choice. If this cannot happen, then the sooner you get an outside person hired and integrated in your culture, the better.”
    
Says Reitter, “Ensure you have a job description of your position and using that, identify the traits needed for someone to fill your position. Then test candidates to find someone who meets those criteria.
    
“Also, make sure that the person chosen understands that the position is earned and is not an entitlement.”
    
Daley counts himself lucky. “For me,” he says, “it’s an easy choice. We have an excellent executive team, and I have two smart kids in the business who happen to have people skills as well. They all work together well now and will continue to do so when I leave.”
    
As does Wagner. He says, “I have two sons and one daughter working in the business. They each have their own roles, and I hope they will each run their own branch soon.”
    
Shares Trautman, “If family is involved, like father and son, don’t just assume that they want the business, or worse yet, force it on them. That said, my son has been working in my company since he was a teenager and now at 31, he will be taking over the company in the near future. I consciously never said anything like ‘This will be yours someday,’ or ‘You will have to take this over.’ I wanted him to want and work for it, and he has.”
    
Observes Heering, “If you are in a family owned business, it might already be decided, but you will still have to monitor that person’s or persons’ actions to see if they are capable and willing to take this role on.”
    
Bleich and Turczynski say that the cream rises to the top. You really don’t choose a successor, they say, because the successor(s) will eventually set themselves apart.
    
Suggests Smith, “In choosing a successor, I would be looking for someone with a fresh set of ideas that will dovetail into the corporate mission statement.
    
“Also, the successor must be a very effective communicator. In some aspects you want someone who thinks like you do, but you certainly don’t want a clone.”
    
Says Castillo, “Pick someone who has passion and skills to grow the company—a respected, seasoned person who is willing to take risks and challenges.”

Grooming
How would you groom your successor?
    
Suggests Sutton, “Slowly exposing the successor to the day-in and day-out tasks will help him or her appreciate and absorb what lies ahead. Place the targeted individual in training/development programs to help him/her grow and learn how to lead properly.
    
“Begin with basic leadership classes and move on to joining organizations such as successor groups, industry networking and executive organizations. Don’t be afraid to bog down [the potential successor] with after-work events. If he/she truly wants the task, he/she needs to grasp early the number of hours and amount of work it takes to captain the ship.”
    
Norb Slowikowski, president/productivity consultant at Slowikowski & Associates, Inc. in Illinois, suggests that “the chosen successor should be assigned a mentor who can provide one-on-one coaching to refine the skills required for the position.”
    
Observes Daley, “We found sharing an office helped a lot. We hear each other’s conversations and provide continuous feedback, no matter the issue, large or small.”
    
Quips Wagner, “Every day is their education. I work with each of them until they beat the teacher, and then we move on to the next subject.”
    
Offers Antone, “Training includes letting a person fail and then learning from that. Some business owners cannot see themselves other than as the owner of the business and cannot give up control. Successful training starts with the owner truly wanting to let go.
    
“I think it is important to experience all aspects of the business—not necessarily know how to do everything, but understanding the challenges of the field as well as the management side of the business,” Trautman says. “Give the successor all the experience opportunities you had or have and discuss with him how decisions are made.”
    
Suggests Heering, “You should always back your successor up on any decisions he or she has made. It might not have been the best one, but you have to back them up and then discuss other options they may have looked at before making the decision they did.”
    
Smith says, “Grooming successors would start with giving them larger tasks and larger problems and as they handle each of these, increase the size and magnitude of the issues. Counsel them along the way until they are making these decisions with confidence and achieving the results you want to see.
    
“Essentially, you put them out there on the high wire and let them walk it. You are the safety net to catch them as they fall, and you put them back up there until they can cross the wire without falling.”
    
Suggests Castillo, “Provide increasing autonomy. Let that person make decisions and assume the consequences of those decisions. Don’t be afraid to foster a new management style. Each person has his/her own way to do things and direct people.”

Leadership
What qualities make a good leader? And when it comes to leadership, which do you value more, managerial or craftsman skills?
    
Slowikowski reflects that, “Leadership is all about improving productivity and developing people.”
    
Navratil observes, “Those who can communicate and have an overall positive attitude toward life in general tend to be those who look at all options and help others succeed, which in return helps both the successor and the company thrive.
    
“Managerial skills are imperative in a company leader. Some craftsmen are good at their skills because they limit interaction with others and focus solely on the task at hand. If you can find someone who is equally talented as a manager and a tradesperson, you have struck gold.”
    
Says Kirk, “It takes people skills, managerial skills, craftsman skills and communication skills. I definitely value craftsman skills more. I believe that whoever is in charge must know the trade.”
    
Says Cox, “Our business is built on good estimating skills, good project management skills and excellent people skills. Whoever takes over will need to build their own team eventually, and they need to be able to recognize who’s good and who’s not, as well as have the ability to build loyalty.”
    
Ruffin’s view is that a “leader has to have an all-around skill level in everything in order to ensure a loyal following. Respect of the leadership is key. The leader has to understand when the decisions made are right for the company and not just for a few individuals. Everything must be taken into account.
    
“As a manager, I value my skilled crafts people. They make us what we are. Without grassroots people in your organization, you can have the best office team around, but that would not matter if the end result is poor.”
    
Observes Reitter, “A good leader can put himself in the shoes of anyone in your organization, empathize, and understand their perspective. He gets things done through his people by enabling them with the appropriate autonomy, and pushing decision-making to the lowest possible level. People skills enable him to lead versus manage, and good communication skills help accomplish things the way he or she wants.
    
“As far as skills, I would value leadership skills over any other skill set. Obviously, a leader with some craft experience will have an easier time relating to the front line of the organization; however, a good leader with little trade experience can earn the respect of the craftsman if he can communicate well with him.
    
“I’ve seen great craftsman make lousy managers—people are much different from products. During the grooming stage, ensure the successor has exposure to all facets of the organization so that he or she has at least a basic understanding of how things are done and understands that everyone’s role is just as important as his or her own.”
    
As for Wagner, “Confidence, not arrogance. He must be a great teacher and a creator of team effort. It takes both managerial and craftsman skills to get the job done.”
    
Says Trautman, “My order of priority: Managerial, communication, people, craftsman. Managerial comes first because you could be the most skilled craftsman in the company but if you can’t manage the business, you will most certainly fail as a successor.”
    
Observes Heering, “I don’t think you have to know the skills of all the crafts to be a good leader of the company. You have others who are experts in the field, and with all there is to do just to keep the business running, you can’t also learn craftsman skills.
    
“Now, junior leaders (foremen, etc.) who work closer to our craftsmen do need to know the crafts well or it will be hard to gain respect when you are telling them what you need them to do.”
    
Bleich and Turczynski say the successor needs people skills, communication skills and problem solving. As for managerial versus trade skills, this depends on the size of the organization. The larger the organization, the more managerial skills would be needed.
    
Smith’s view is that “a good leader can see far down the road and help avert negative situations that may develop or take advantage of positive opportunities that arise.”
    
Says Castillo, “Leaders should listen to and empower others.”

Final Thoughts
Summarizes Reitter, “Succession planning is a continuous process that should be started as soon as possible. It entails much more than you would ever think, and the process is very fluid. Transferring the stock and handing over the keys is the easy part. Ensuring success of the successor(s) is the biggest challenge.”
    
Advises Trautman, “Start early, even if you have no end date. Life throws you curve balls, and the more you have planned early, the better it will be to navigate the unexpected when it arises.”
    
Heering suggests, “The important thing is to always pay attention to your people to see who might have the desire and who wants to go into management. You have to recognize whether they possess leadership qualities and whether they gel with the other members of the team. You have to observe whether they work to make the whole team successful, or if they work to do it all on their own.
    
“The right person knows how to delegate to others in a way that make them want to help him or her to be successful, which in turn makes the whole team a success and leads to a very successful business.”

California-based Ulf Wolf is the senior writer at Words & Images.