Five years ago, Joseph D. Gilbert believed he'd found the ideal individual to succeed him at Molding Corp. of America, a custom injection molder in Burbank, Calif. On June 1 that man, Craig T. Morton, resigned by mutual consent after struggling for several months over how the reins of the company should be passed. Now, at age 78, Gilbert is back at the helm of the company he founded nearly 30 years ago. And Morton is philosophical.
``We could no longer go forward together, so I felt it was best to step out of the way, rather than fight him on issues and tear the company apart,'' Morton said. ``No one wins in that situation.''
It is a fact of life. As the entrepreneurs who built theplastics processing industry begin to retire, succession planning becomes a critical issue - and a thorn in the side - for many company owners. But finding a successor is never easy, and the path for both parties can be full of painful pitfalls.
For these entrepreneur-owners, letting go of the company they've built from the ground up and entrusting it to another leader - often one with a different management style - is a difficult pill to swallow. The companies are their babies, and the tendency is to want to protect and control them to the end.
Talking with Morton and Gilbert reveals that at the heart of the problem lie some fundamental differences between the two men's management styles. Morton is Ivy League, college-educated and the cream of his graduating class from Michigan Technological University with a degree in chemical engineering, and a successful 16-year sales career at DuPont Chemical Co. before moving to MCA.
By his own description, Gilbert is the exact opposite.
``I was on the streets by age 14 and self-educated. I'm a street fighter,'' Gilbert said, with a hint of pride creeping into his voice.
Morton envisioned making MCA into a world-class company through new technology and employee empowerment.
``Joe was not comfortable with the increasing sophistication needed to meet the requirements of today's global customer,'' Morton said. ``But the business got so large over the past few years, we made so many changes that it got beyond his comfort level.''
Gilbert, who describes his management style as that of a hands-on molder, said Morton did not spend enough time on the molding floor.
As MCA became an increasingly sophisticated company, upgrading its computer systems, buying new molding presses and hiring a salesman for the first time in its history, Gilbert became increasingly uncomfortable with the changes.
``We got to $20 million in sales with no salesman,'' Gilbert said emphatically. ``We didn't have all these big engineering programs. We made money just making parts.''
Richard L. Jones, chairmanand chief executive officer of Management 2000 Inc., a management consulting firm in Burbank, Calif., said the dynamics of a company often change over the years, while the management structure does not, causing a big split when someone new comes into the picture and begins implementing changes.
``Companies today need different and new expertise,'' Jones said. ``What is required to run IBM today is different than what was required to run it 20 years ago. The same principle applies to small companies. You have to adjust everything to meet changing requirements of employees, customers - everyone.''
Jones added that the problem he finds with many plastics processing company owners is that they come from a hands-on technical background, not a management background. Consequently, they have a difficult time adapting to new management styles.
``Just because an owner's system is old doesn't make it wrong,'' Jones said. ``But often they have a difficult time seeing the benefits to doing something new or different. Stubbornness can keep necessary changes from being made.''
Gino Cavallini admitted that inflexibility probably had something to do with the failure of his latest attempt to bring in a successor. A mold maker by trade, Cavallini has spent the past 23 years building his companies, Trend Plastics and Tool Tech Inc. in San Jose, Calif., into a $65 million-a-year business.
In October, Cavallini tried for a second time to bring a successor on board. And for a second time, it just didn't work.
Although at age 52 Cavallini is not nearly ready to retire, he wanted someone to take on more of the day-to-day operations so that in 10-15 years he can step down and be comfortable that the businesses will continue operating.
After two tries and some timeto reflect on what went wrong, Cavallini takes the blame for many of the problems.
``I think it's my fault personally when a new person comes in and fails,'' he said.
Acceptance of a newcomer by the rank and file, many of them longtime employees, is a major roadblock for a successor.
``A new guy comes in and changes things,'' Cavallini said. ``The old-timers get panicky, worried about if the company will fail, and so they make the person fail.''
Discomfort among employees and customers when a new person steps into the picture and implements change is something that Cavallini said he did not recognize the first time he tried to find a successor, but saw the second time around.
Being a potential successor can be equally challenging.
Management 2000's Jones said the successor ``walks a tight wire'' between maintaining the old ways and introducing new ones.
David Fleck, who worked in the role of Cavallini's successor until a month ago, agreed. Although he tried to do many things similarly to Cavallini to build a comfort level among the employees, Fleck said it does not always work.
``Some of the employees were comfortable with the changes I made, and some were more comfortable with doing things Gino's way,'' Fleck said.
Jones said the biggest stumbling block to a successful succession is an owner who steps back, but not out of the way completely.
``Here, I want you to do this job,'' Jones said owners tell their successors, ``but do it the way I did it.''
MCA's Gilbert and Trend's Cavallini both have given up trying to find successors, but each man has a different vision for his company.
Gilbert said, ``It's near impossible to find a successor.''
So he has decided to hold the line right where it is at MCA, delegating day-to-day decisions to a five-member ``office of the president'' consisting of Gilbert, the head of administration, director of sales and marketing, operations manager and a corporate secretary/treasurer.
``I don't want to be the point person anymore,'' Gilbert said. ``I don't have the energy.''
Cavallini, who said he still has the energy and the vision to expand his company to the next level, wants a ``right-hand man'' to help him in the areas of business where he feels he is weak.
``I want to grow this company as much as I can over the next 10 years,'' he said. ``I still enjoy the challenge.''