Based on the preceding discussion an ownership model for succeeding in the global special machine tool market follows:
Ownership, to the extent of control, is in the hands of employees, largely the managers at senior levels.
The board of directors is composed of inside and outside directors, ideally including a majority with direct experience in the industry and some with background in finance/banking.
The Chairman is a retired high-level special machine tool executive.
The CEO with the characteristics described in Chapter IV is a seasoned veteran of the company, with an obviously solid track record, gravitating to top levels on his own performance. He is an enthusiastic proponent and facilitator of the Yankee ingenuity culture.
A significant portion of manager’s income is an incentive component and paid in company stock.
Company match 401K paid in company stock.
A stock option plan is in place for executives and certain managers.
Stock purchase plan is in place for all employees.
Highly selective hiring principles and training, mentoring and challenging are company hallmarks.
Policies for advancement and ownership are stated in company mission, as is the Yankee ingenuity operating philosophy.
A significant level of stock is held publicly for capitalization purposes.
Notes: Broad employee stock ownership is intended as a method to achieve ownership as much in spirit as in finance and should not in any way limit the stockholders from making intelligent investment decisions based on their own circumstances. Timely internal communications regarding company performance and prospects are essential. As stated earlier, the “no rules environment” philosophy cannot affect the integrity or financial responsibility and reporting or forthright employee, shareholder, or customer relationships.
This model of a company, which ensures management succession through “the reasons we work” recruiting and management, leadership trait fostering, and ownership, enabling and facilitating the “find a way” Yankee ingenuity philosophy, is the winning model.
This company is operated by owners who are knowledgeable about the industry and who are significant and passionate stakeholders. All the special things done by the earlier entrepreneur, from instilling confidence in the high level customers to visionary planning, to assessing the viability of and managing execution of projects and celebrating successes can be done by the operating owners.
Many of the employees are financial stakeholders as well as in spirit, since ownership occurs at all levels. The understanding and acceptance of the responsibilities to customers, shareholders and employees must be pervasive. In an ideal world, the family entrepreneur is retained on the board of directors and/or as an operating consultant through a transition period to broaden and harden the new managing executives and may retain stock.
The venture capitalist’s top two requirements bear repeating at this juncture: the organization team must be obviously passionate about its products and its mission, and the top management and owners must be as knowledgeable about all aspects of the business as anyone can be.
This is hardly an original plan, but it is one that could have saved some of those that have disappeared. It should be considered by some of those companies in the upcoming cycle of smaller companies that may have succession concerns.