December 2019
R
unning a business isn’t easy and running a
business across multiple generations can
sometimes feel impossible. The vast majority —
approximately two-thirds to three-fourths — of
second-generation businesses fail. By the third
generation, the failure rate exceeds 90 percent.
From the moment you start a business, you are
fighting to keep it going and changes to leadership
only heighten that tension. One wrong leader or
one poorly timed transition and everything you’ve
achieved can disappear. The further away a business
gets from the leaders who had the initial vision and
passion to build it, the harder it becomes to main-
tain that success.
A succession plan can be the most important
part of your legacy as a manufacturer. By providing
the business with a blueprint to survive, you increase
the odds of being there for generation two, three,
four and so on.
But what makes a successful succession plan?
MMA members Koeze Company, Lomar Machine
& Tool Co. and Stormy Kromer have all fought to
develop their own transition strategy while associate
members like EDSI Consulting, Kerr Russell and
Weber PLC, and Maner Costerisan use their
knowledge and experience to help countless
manufacturers create viable succession plans.
Consider how their advice can support your brand’s
future and connect with MMA’s associate members
for help in developing your own succession plan.
Preparing for Unexpected Transitions
“Just like good strategic planning, succession
planning provides a sense of direction and stability
for the future,” explained Gina Jacquart-Thorsen,
president of Stormy Kromer, a division of Jacquart
Fabric Products. “By having a succession plan in
place for key positions — from ownership to
executive leadership to production management —
you give your company a stable foundation by
which to succeed now and in the future, without
the distraction of worry and stress about who will
be filling these roles.”
While some companies benefit by knowing its
second or, in the case of Stormy Kromer, its third-
generation is being prepared to take over ownership
and leadership, many companies don’t. Issues like a
sudden death or a family-owned business with
either no future generations or a lack of interest
from future generations can turn clear succession
into a haze of uncertainty.
“Succession planning is important and should be
managed continuously. There is a short-term aspect —
what if somebody dies or departs suddenly for some
reason — and a long term aspect — when are people
planning to retire, hoping to move to part-time, etc,”
said Jeff Koeze, CEO of Koeze Company. “For us,
MiMfg Magazine
the most helpful thing has been to do a ‘hit by a bus’
exercise. We ask ‘what would happen if this person
got hit by a bus today?’ This generates a document
that captures all the key functions of a job in
sufficient detail that somebody could in theory pick
up the job and take over.”
A proper succession plan should be
written and communicated throughout
the management team so they can
include necessary actions in their
planning. It needs to be flexible enough
to incorporate changes, yet concrete
enough to properly guide its execution
through the most difficult tasks.
— Dennis Theis • Maner Costerisan
Once you’ve considered what is required to
maintain functionality in the event of unexpected
transitions, you can start preparing for both worst-
case scenarios and anticipated transitions.
The “Must-Haves” of
Your Succession Plan
Of course, nobody wants to activate a succession
plan due to unforeseeable issues like death or illness. In
most cases, transitions will be expected — a retirement
or a career transition either with an individual moving
to a new role within the company or taking a new
job outside the company.
“A good succession plan identifies and develops
new leaders or staff members who are willing to fill
the position and comply with the process once other
leaders, or personnel, leave or retire,” said Ron
Geisman, president of Lomar Machine & Tool Co.
“Identifying candidates and developing internal
people with the potential to fill those leadership
roles is key to Lomar’s succession plan.”
According to the team at EDSI Consulting, to
achieve maximum effectiveness (and minimum
disruption) you should:
• Appoint a “champion” who owns the process of
reviewing, updating and implementing the plans
• Identify all critical positions within an organization
and estimate when the position may be vacated
• Create success profiles for each critical position
• Identify one or two potential successors for all
critical positions — this can be done by developing
a current organizational chart and an anticipated
organizational chart set three to five years
into the future
13