How To Develop An Executive Team - Advising an Owner/CEO on developing an organizational chart
A few years ago, I met with a German engineer who had built a small, global machine tool manufacturing business just South of Indianapolis. He was an excellent engineer who loved to design new machines, large custom rotary tables, and pallet systems for industry. But after leading and growing the business for forty years, he was thinking more about fishing with his grandson than building business.
He had decided it was time to sell his business. And, he was wise enough to realize that he’d need help.
While an excellent designer and engineer, he was fairly distrustful of salespeople. And as an excellent engineer, he was reluctant to promote his senior design engineer who had been with the business for 25 years. He had trusted staff for accounting, billing, and administration. But, he was very hands-on in running most critical aspects of the business.
I had to reason with him that no one could buy his business as long as he held so much critical responsibility himself.
So working together, we devised an organizational plan and chart. I advised that a new owner of his business would want to know that the business would continue to run without him - it’s owner / founder / chief engineer / head of sales / CEO.
The first step was to convince him to hire an experienced, competent machine tool sales director. This was critical to showing a potential new owner that new sales and new business would continue to come in the doors while the founder/owner transitioned to retirement. Over a three month period, we evaluated several experienced machine tool sales professionals and were successful in hiring a former National Sales Manager from a major international machine tool manufacturer who happened to be between jobs.
The new Sales Director was quite effective in establishing a multi-million dollar pipeline of quotes that over time would turn into new orders. He also built a new web site for the business and established some social media marketing channels.
Next was to promote the long time senior design engineer to VP Engineering. Surprisingly, this individual was a little reluctant to take the title even though a very accomplished Purdue ME. But he did agree and took on more responsibility for interacting with key customers.
Finally, the Executive team for this $5 million manufacturer included a CEO/President who would retire, a VP Operations who had been there 20 years and would continue, an experienced and tenured VP Engineering, and a 20 year experienced Sales Director. The longtime Controller would be part of the Exec team but planned to retire with the CEO following the transition to a new owner.
After meeting with several dozen potential buyers, corporate, PE, and individuals, we were able to meet with an executive who had been the VP Finance for one of the company’s customers. He was very familiar with the company’s product, applications, pricing, materials, etc. It ended up being an excellent sale and transition for all parties.