“Two Perspectives on Succession”
Michael Foley, President & CEO, Reflexite Corporation
Paul Silvis, Founder, Former Head Coach, Restek Corporation
Moderated by Diane Stoneman, Director of Consulting and Training,
Winning Workplaces
© 2009 Winning Workplaces. May not be reproduced
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About Winning Workplaces
•
Founded in 2001 by
co-owners of Fel-Pro
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Committed to small/midsize
organizations building
healthy, productive work
cultures
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Triple bottom line: Business,
People, Community.
Top Small Workplaces Recognition
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The Wall Street Journal
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Winners profiled Oct. 2008,
WSJ.Com/Entrepreneur
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Report @
WinningWorkplaces.org
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2009 competition underway
2008 Top Small Workplaces Winners
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ATA Engineering
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Decagon Devices
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Integrated Project Management (IPM)
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JA Frate
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Jackson's Hardware
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Jump Associates
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King Arthur Flour Company
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Landscape Forms
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Lundberg Family Farms
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New Belgium Brewing
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Phenomenex
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Rainforest Alliance
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Resource Interactive
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The Paducah Bank & Trust
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The Redwoods Group
Our Agenda today
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The succession tale of two firms
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Impact on business and workforce
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Lessons learned
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Questions from audience
Featured Presenters
Michael Foley
Paul Silvis
President & CEO
Reflexite Corporation
Avon, CT
Founder, Former Head Coach
Restek Corporation
Bellefonte, PA
Michael Foley
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President & CEO
• Reflexite Corporation
Reflexite Overview
Core Technologies
Fundamentals
Optical Engineering
Microreplication
Polymer Processing
Technology
Ownership
Quality
Three Business Units
Reflective Products Business
Display Optics
Optical Solutions Business
Reflexite Global Locations
Reflexite
The Management of Light
®
May 2008, 515 employees Worldwide
Goals of a Successful Succession Process
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Continuity of Leadership
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Business Results Sustained/Improved
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Preserve Essential Culture and Values
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Individual Goals are Met
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Personal
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Career
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Financial
Risks in a Succession Process
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The risk of failure…….
– Is
High. Empirical data suggest that more than 50%
of succession scenarios fail in one or more ways
versus the ideals. Only 25% of family businesses
make it to 2nd generation.
– Can
be detrimental to business. Discontinuity of
leadership, distraction of management, etc
Common Causes of Failure
• No Succession: CEO dies/incapacitated without implementing
succession plan
• No Process
• Failed Process:
• Departing CEO “can’t let go”
• Incoming CEO does not meet expectations
• Personality Conflicts
• Family Issues
• Financial Complications
• Opaque process/no objective independent oversight
Elements of Reflexite Succession Process
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Candidate Selection and Development
• Board Involvement
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Succession Committee
– Mentor
– Full Board Engagement
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Shared Expectations
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Roles and Responsibilities Matrix
– Frequent “Calibration Sessions”
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3rd Party Facilitators
Engaged “Coach”
– Peer Groups
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Milestone Based Process (CEO Readiness Criteria)
• Use of Symbolic Transitions/Communication of Process
• Time
Characteristics of Reflexite Succession Process
• Transparency
• Board
Oversight
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Independence
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Expert Involvement
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Buy-in
• Consideration
of needs of individuals
involved and their unique personalities
Board Involvement
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3 Board members who had experience with succession
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Peter Russo - CFO who became CEO of Data Instruments
– Art LoVetere – Pres. became CEO MacDermid Chemical; transitioned to
son of his former CEO
– Peter Eio – Pres. of Lego USA, succession in large family company
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University Professor Peter Russo served as mentor
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“Executive Sessions” amongst outside Board members
Responsibilities Matrix
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Purpose:
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Provides clarity on roles and responsibility
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Defines limits of authority
Benefit is more in the process of developing rather than day-to-day use
Outside Assistance
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Peer Groups
– UPENN
ESOP CEO Group
– Other Possibilities (YPO,TEC Group)
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Facilitator
– Engaged
“coach” with psychology and background in
corporate coaching
– Assisted
in conflict resolution and helped parties
understand each other
CEO Transition Milestones
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Performance Mgt Process for Incoming CEO
– “CEO Readiness Criteria”
– 360 Evaluations
– Bd Involvement: Criteria, Measurement, Follow Up
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Liquidity for Outgoing CEO
CEO Readiness Criteria
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28 Criteria – derived from from UPENN “Leadership in an Ownership Environment”
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Confidential 360 Process was used, along with self-evaluation
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Grouped into “Exceeds Expectations”, “Meets Expectations, but Could Improve”, and
“Development Required”
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Mentor worked with me to develop action plan
Results
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Managed 2nd transaction- no abrupt change
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We got it right on the first try….
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Both outgoing/incoming CEO achieved primary goals
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No one got fired!
Firm prospered before, during, after transition
Opportunities for Improvement
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Need a timetable AND milestones
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Should have put “liquidity” first on the list rather
than an afterthought
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Patience
Paul Silvis
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Founder, Former
Head Coach
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Restek Corporation
My Journey
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Started Restek at age 30.
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No formal business training.
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No money or “rich uncles”.
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No management skills.
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No fall back position.
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Would rather fail than not try.
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Passionate about employee
treatment.
Restek Beginning
Elementary School Incubator on October 15, 1985
Founding Principle:
“Employees enjoy coming to work as much as going home.”
Restek Grows Double Digits!
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275 employees
Germany, France, Ireland, U.K., Japan offices.
Distributors in 80 countries
145,000 square feet, >4 mil/month
Inc 500, Entrepreneur of Year, Best Places, etc.
Owner “grew” as business grew
Restek’s Business
Manufacturer of consumables for
Analytical Instruments
Gas Chromatography Columns
HPLC Columns
Packed Columns
Instrument Accessories
Reference Standards
Air Monitoring Canisters
SPE
Restek’s Business
Technology driven division:
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CVD Coating service
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Passivation, Corrosion, Anticoking,
UHV, Decorative
Lifetime of a CEO
• Packed schedule for 20 years.
• Things became more predictable.
• Less engaged in business; more engaged in
community.
• Every leader should replace themselves.
• CEOs friends sold out for the highest buck.
• Developed 7yr vision to transfer leadership
and ownership
• Developed a plan to realize the vision
• Communicated vision to as many people
and as frequently as possible
Identifying a Successor
• Executive Coaching (Bartell)
• Looked for individual with different skills.
• Wanted an individual confident enough to
challenge me.
• Sought individual who believed in Core
Values
• Next Head Coach had to be well rounded
and know the market.
• Obtained feedback privately & publicly.
• Wanted to promote from within.
• Named a successor on the 18th year.
Identifying a Successor (continued)
• Chose Director of Sales and Marketing
• Challenged Don to replace himself.
• Almost pulled the plug in 6 months!
• Spent time communicating “relay
race” vision and clarifying responsibilities
to Management and Employees.
• Developed “it will work” mental vision.
• Maintaining trust was key to success.
• OK to disagree.
Communicate Transition Process
• Stepped down as HC in October 2005.
• Created symbols of power transition
• Moved out of office
• Celebration
• Changed my behavior – less vocal
• Established two confidants.
• Weekly mentoring
• HC has less power!
• Continued executive training.
• Weekly mentoring sessions.
Keeping a Founder Busy
Biggest question was
“What will Paul do?”
• Chair Board.
• Lead growth and acquisitions.
• Back to “creating & inventing” roots.
• Accountable for facility & buildings.
• Back to school for Smeal executive
MBA as husband & wife team.
• Was busier than ever!
• Felt challenged & alive!
Reaching 100% ESOP
• Next transition: Company of Owners.
• Real-estate model to negotiate sale to
employees.
• Stock valuation concern.
• 23% to 100% ESOP on 12/31/08.
• Spun off RPC division.
• Established a 15-year HC term.
• Wrote governance document.
• Defined roles and structure.
• Created an anti-solicitation policy.
100% ESOP
A Company of Owners
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Proud of employees during economic downturn: Level I, II, III cuts
Employees and Managers making ownership decisions.
Don continues to learn rapidly.
I am less visible.
Rarely attend Management Team meetings.
Rarely walk the halls.
Conscientious to not create leadership confusion.
Act as a coach to help individuals through business challenges.
Am busier than I have ever been with SilcoTek, other business
ventures, and volunteer organizations!
• My Life Vision: Never retire – just change jobs!
Questions?
www.Reflexite.com
www.Restek.com
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