Ceramic Industry

SPECIAL SECTION/RESOURCE MANAGEMENT: Succession Planning: A Key to Longevity in Any Enterprise

May 26, 2007

In these first years of the 21st century, technology continues to advance in the ceramic industry. Compared to other industries, however, ceramic manufacturing isn't necessarily in the early stages of its life cycle, at least in the U.S. It seems that for every new player that emerges domestically, a handful of counterparts spring up internationally. But what is it that provides longevity to firms that remain vibrant within a somewhat mature marketplace?

The first obvious answer is innovation. The responsiveness of marketers to identify unmet needs, the creativity of ceramic engineers to design better products, and the discipline of operational efficiency leaders to sustain profitability all illustrate innovation within the industry. Yet, some firms fall by the wayside while others endure.

There has to be some other factor that enables American ceramic manufacturing to remain vital after so many years. Perhaps the answer can be found in considering the source of innovation-people. Over the last 108 years, Sauereisen, Inc. has experienced and overcome a multitude of challenges, becoming a successful player in the research and manufacturing of specialty cements. In the context of business longevity, the Sauereisen story provides an insightful case study on the subject of succession.

In 1899, at the age of 16, C. Fred Sauereisen formulated his first product, Insa-Lute Adhesive Cement. Despite having little formal education, C. Fred was equipped with a working knowledge of ceramic-based materials, and he found buyers who needed to bond ceramics, metal and glass. This was the start of Sauereisen, Inc.

Not surprisingly, C. Fred found the going rough as a "one-man band." Like just about every other successful garage-based inventor, his need for personnel expansion rivaled the need for product diversification. Consequently, one of the first major decisions Sauereisen faced was the issue of company succession.

Delegate Effectively

Whether a business is in start-up mode or boasts an established track record, critical functions exist that demand the full commitment of the business' leaders. Certainly there is merit in the model of hard work illustrated by those who have "pulled themselves up by their own bootstraps" to attain success, but ultimately it is imperative to confront increasing overhead and other considerations that result from growth.

C. Fred Sauereisen relied on a select few employees to tackle tasks such as distributing product and managing paperwork. This freed him up to focus his energies on formulating, manufacturing and promoting his products. Without a doubt, a business must maintain financial prudence when adding to its team, but the upside of what can be accomplished when key innovators are freed to apply their creative energies shouldn't be overlooked.

The staff and leadership of Sauereisen at company headquarters in Pittsburgh, Pa.

It Doesn't Happen Overnight

Succession isn't a light switch; it must be planned for in a way that averts unpleasant surprises. The company's leadership must proactively identify a company's future needs and address them intentionally.

C. Fred's dream of succession included passing the business on to his three sons, Phillips, William and Ferd. Each generational transition of a business poses typical challenges, but things were complicated in C. Fred's case by a larger-than-normal age gap. It wasn't until the age of 46 that C. Fred and his wife, Marion, became parents. Consequently, non-family members played a key part in the generational transition. George Read was one of the individuals C. Fred trusted to learn and manage the business as his offspring developed their own understanding and expertise.

In time, the second generation of Sauereisen ownership settled into areas matching their gifts and interests: Phil excelled in administration and industry relations; Will was drawn to personnel; and Ferd progressed in sales, finance and international partnerships. All the while, George Read supported the company's technical capabilities and instilled the managerial discipline that enabled continuity.

A similar pattern played out in the transition to the third generation. Eric Sauereisen and his cousin, Karl, joined the company in the early 1990s, working under the tutelage of Patrick Connell, who had professional management experience from elsewhere in the industry. Having initially gained experience outside of the family business, the third generation of Sauereisens worked in various areas of the company prior to assuming roles as officers in 2002.

Beyond the CEO and Family of Origin

The typical maturation process of a business involves a move from centralized, closely held decision making to a more participatory form of management. In this process, leadership should emerge from among several functional areas and throughout all levels of the company. Put another way, effective succession encompasses more than just ownership and the pinnacle of an organizational chart.

Consider the impact of front-line employees or backstage support specialists. As Ferd Sauereisen, now retired, used to say, "On a given day, our customers are more likely to be impacted by a front line worker's absence than my own." Ferd didn't state this as justification to play hooky, but rather to underscore the importance of those who deliver direct value to the customer.

Along these lines, Sauereisen, Inc. has strived to build a corps of multi-functional team players that can assist during peak market demands. Although such flexibility is sometimes borne out of crisis, the company's management team frequently establishes cross-training objectives to ensure personnel coverage for customer-critical areas.

On an even more strategic basis, the management team annually forecasts staffing additions that will occur over the next year, and even over a 3-5 year period. These details are part of the strategic plan reviewed by Sauereisen Inc.'s independent board of advisors. It should be noted that the basis for projecting new hires is to support business growth, address changing needs or simply to plan for inevitable attrition.

Fred Sauereisen founded Saureisen, Inc. in 1899.

Putting the Plan in Motion

Amazingly, many companies neglect to consider the major ramifications of succession planning. All too often, a business shuts down or is forced to change hands upon the patriarch's retirement or death. In other cases, major setbacks are experienced when a person of unique creativity or exceptional productivity leaves the picture and/or estate planning isn't considered.

Two of the most common reasons for unplanned succession include short-term orientation and potential emotional conflict in confronting the prospect of personal separation. The first cause for inertia listed here, short-term orientation, can be at least partially addressed through the creation and acceptance of a vision for the company. The Sauereisen, Inc. vision is "to become a world-class provider of specialized solutions within its industries." In support of this vision, the company's human resource goal is "creating value for customers by building a world-class team of committed individuals." Matters of succession help to promote both the department goal and overall vision.

As for the emotional side of succession planning, it must be realized that all things in this world are temporary. It's better to investigate the challenging issues of succession before the need arises rather than afterward, when turmoil might be excessive. This is a recurring theme among companies in the family business networks to which the Sauereisens belong.

Moving Forward in an Imperfect World

Succession challenges can arise despite the best of planning. Vulnerabilities exist that need to be addressed, and the uncertainties of tomorrow will surely challenge those in a position to face them.

What is it that will sustain Sauereisen, Inc. beyond its first 108 years? The answer is simple-people and planning. Bloodlines may play a role, but it is family in a larger sense that will make the difference. Yesterday's innovations and sales will only provide benefits for so long. Ultimate longevity will be determined by empowering the right people today, and planning their future roles in the company.

For more information, contact Sauereisen, Inc. at 160 Gamma Dr., Pittsburgh, PA 15238; (412) 963-0303; fax (412) 963-7620; e-mail cksauereisen@sauereisen.com ; or visit www.sauereisen.com.

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