Succession Planning: An Out-of-the-Box option
Category: Business • May 27, 2020
By Kathy Keyes Webster, AMT Exhibitions Content Manager – Correspondence
Find out how one CEO implemented an Employee Stock Ownership Plan or ESOP to spur innovation, collaboration, and growth to benefit the employees and their customers—all while doubling their sales in five years.
One of the oldest continually operating tooling companies of its kind in the United States, Crafts Technology, makes precision tools that are used to manufacture everything from airplanes to diapers.
In 2014, Crafts Technology hired Jeff Taylor to be groomed into the role as President and Chief Executive Officer to grow the business. Jeff was challenged to capitalize on the past performance of the company while also working with his team to create a strategic plan and future roadmap for the company, essentially re-inventing many aspects of the 127-year-old company.
Crafts Technology is traditionally known for developing components with the highest degree of wear resistance and tools that could cut tough materials such as carbon fiber composite material used in the aerospace and automobile industries.
Jeff, a champion of ESOP, recently shared how he worked closely with the company’s long-time business owners to sell their company to its employees, boost its performance, and double its profits within five years.
He was recruited to work with the company’s existing management team to help transition the company to an ESOP company, which means workers own interest in the company. ESOPs often give the sponsoring company, the selling shareholder, and participants tax benefits.
In an ESOP, employees learn, “We all rise and fall together,” says Taylor. The ownership environment moved the company to a culture of innovation. Everyone from the design engineer to the sales manager contributes to solving customer problems. When it's time to apply for patents, every employee who helped develop and tweak the solution is listed.
“Traditionally the person who conceptualizes the idea wants to hold it close and doesn’t want others in on it”, says Jeff. “But now that person wants input from the technician, the machinist, and even the sales person to improve the idea and contribute to several iterations to make it feasible and worthwhile. Now everyone is sharing ideas and building upon them.”
At Crafts, the new culture of innovation is showing positive returns. Crafts has filed several patents, doubled its sales in the last five years, and best of all, everyone in the company has benefitted.