Academic journal article Journal of Case Studies

Succession Planning and Leadership at DRYCO, Inc

Academic journal article Journal of Case Studies

Succession Planning and Leadership at DRYCO, Inc

Article excerpt

Introduction

Daren Young, CEO of DRYCO Inc., and three business associates returned from the February 2013 Super bowl and he reflected on a narrow loss by his favorite football team. This caused him to mull over the reasons for the narrow margin between DRYCO losses and profits over the years. DRYCO was founded in 1985 as a pavement construction and maintenance company resulting from a family business crisis. Young worked hard over the years to move his family firm from losses to growth and sustained profitability (Company Events and Milestones, Appendix A). After many growth years, the last few years had been especially difficult for the firm due to the economic recession and decline in the local real estate market that seemed to drive the pavement construction and maintenance (PCM) industry. Young had received several suggestions that he should start succession planning to avoid future crises, but he felt that at age 50 other aspects of his leadership had more immediate company impact. However, if he changed his mind and started succession planning, he wondered about the best timing and how to start.

Young sensed the start of an industry downturn in 2008 and he avoided the start of a DRYCO crisis by reducing his firm's operational expenses to maintain profit margin and employment. In 2009, he made a bold decision to expand to a second location, a site fifty miles away, in an effort to increase sales. After a short-lived dip in revenue, he managed to return company revenue to pre-recession levels while the PCM industry remained in crisis mode (Appendix A). The economy continued to improve and he was confident the expansion decision he made in 2009 was a good decision. 2011 was the first year Young recalled the CEO succession topic came up; however, it seemed to arise more frequently now and from diverse sources. The most recent advice concerning the topic arose in a March 5, 2013, session when his CEO-coach asked:

When you leave DRYCO, who is going to take over as CEO? He responded: I am too busy and young to think about it seriously. When I am ready, I will get back to you.

After his March 2013, CEO-coach session, he sat alone in the office and uttered two questions:

What would have happened if I was not around to make the right decisions? Does this imply that it is urgent that I select my successor as CEO?

Young searched for more information on succession planning and discovered it was one of the most important issues family firms faced, but such planning was seldom done by these firms (Hegeman, 2012; Handler, 1994). He concluded that CEO succession was part of his leadership role but he also realized that most likely he had a different answer to the coach's question about succession planning than his wife, kids, attorney, and other stakeholders. These recent meetings with his CEO-coach made Young realize more than thirty years had passed since he took over his father's firm and subsequently formed DRYCO (Appendix A). Young recalled many of the crises he avoided over these thirty years were a combination of planning and his gut instincts. Hence, he questioned whether he should start succession planning now, wait until the next time he updated his Will and Trust in three years, or start right before his retirement in ten years.

The Pavement Construction & Maintenance Industry (PCM)

Daren included national, regional and local industry trends in DRYCO business decisions. The U.S., regional and local PCM industries were not easy to define but the literature and interviews with industry observers showed they were depicted in several useful ways (A. Heydorn, personal communication, January 29, 2013). Nationwide PCM contractors were usually included in the private sector road, driveway and parking lot activity and they specialized in either the private or public sector, except in difficult economic times. For example, many attempted to cross over into the other sector during the 2008 recession to survive. …

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