Cast in stucco: A succession plan takes shape
After a period of procrastination, the three brothers who own Reitter Stucco & Supply Company in Columbus, Ohio, got serious about planning in 2010. Their plan remains a work in progress.
It was on the radar screen, especially over the last five years. Succession planning was right there, on the "To Do" list. It was never really forgotten but somehow had gotten sidelined, a casualty of the daily demands of running Reitter Stucco & Supply Company Inc., based in Columbus, Ohio.
But with the company about to turn 100 years old, and with all three brothers on the executive team in their 60s, the "elephant in the room"—the need for a clear and carefully devised succession plan—couldn't be ignored.
"When our grandfather and father left the company, life wasn't this complicated," laments Fritz Reitter, the fourth-generation company president.
"Both our dad and granddad just announced their retirements, and in our grandfather's case, he just pretty much disappeared," Fritz says. "In our father's case, he did keep coming back, because that was his way. Still, the process itself was not terribly formal."
In the 21st century, that informality is no longer a viable alternative, especially not for a company that has seen some familial upheaval.
After a lot of hard work, Fritz, 64, together with brothers Bobby, 61, vice president of operations, and Jack, 60, vice president of sales, have devised a strategy that will, they hope and expect, ensure a smooth succession.
The effort began in earnest in 2010, when Fritz joined a CEO peer group at the Conway Family Business Center in Columbus. It was an eye-opener for him. Other members of the Conway Center and its staff began helping him focus on the road map ahead.
As that focus sharpened, conversations progressed with the company's board of advisers, which meets three times a year and currently consists of three members: a marketing specialist, a financial specialist and a retired former customer.
Initial feedback included the simple yet vital mandate that all three brothers must agree on a plan. And they eventually did—but not before options of all sorts were floated.
Those options included selling Reitter to an outside buyer, liquidating the company, setting in place an employee stock ownership plan (ESOP) and passing Reitter on to the next generation. The conversations revealed that the common goal was to keep the company in the family.
A key planning element was staggering the retirement dates of the three principals. The brothers now joke that there have been about 8,000 meetings—and they say their ancestors would have been stunned at the complexity of it all.
Among the steps taken was hiring as their corporate attorney one of the founders of the Conway Center. Bea Wolper, who founded the center with her husband, Dick Emens, orchestrated a management succession planning retreat that got the brothers off on the right path.
Last summer, the brothers identified the key succession management team. Two family members and two non-family members are expected to be the future company leaders, although their specific future roles have not yet been determined. To prepare them for what's ahead, all four members of that future management team are attending educational programs at the Conway Center on topics such as finance, leadership, marketing and project management.
The two family members are Fritz's son, Kyle Reitter, 29, who works in sales for the company, and Fritz's son-in-law, Dustin Wilshire, 31, who works in the operations end. Other members of the family are not involved in the business and have declined participation.
The all-important timetable for retirement of the three leaders turned out to be a surprise because the brothers decided to retire in reverse age order.
Jack, the youngest, will retire at the end of 2016. Bobby, the middle brother, will retire at the end of 2020. And Fritz, the oldest, will be the last to retire, at the end of 2023. The full retirement cycle will span seven years, a feature that appeals to all concerned.
Yes, it's been a long and arduous journey, and the Reitter brothers have advice for other family business owners who are starting to consider succession:
Expect some bumps in the road.
Learn from others willing to share their knowledge and experience.
"And always remember to honor legacy," suggests Fritz Reitter. "It's a special consideration that we believe deserves special care and handling."
The past's impact on the present
The brothers' great-grandfather, Gabriel Reitter, a man they never knew, took the giant leap that would change the family's destiny. In 1910, he made the decision to emigrate from Austria to the United States, leaving his family behind while he gained a foothold in the new country. Like so many other immigrants, he saw America as the land of opportunity.
He seized that opportunity in 1915. That year Gabriel, already a masonry artisan, opened Reitter Stucco in Columbus with the motto that has endured almost verbatim for 100 years: "We Put It On To Stay Forever And It Does." That has been slightly shortened to "We Put It On To Stay."
Gabriel was a success in the region's residential market. His family finally was able to join him after he had spent 11 years without them in the U.S.
In 1939, Gabriel's son, Gabriel Jr., was named president of the company, and the business grew and prospered. Gabriel Jr. had a penchant for marketing; he managed to make the company stand out in the marketplace and capitalized on opportunities.
Richard Gabriel Reitter, better known as Dick, brought the company into the modern era. Dick orchestrated technological advances at Reitter Stucco. In addition, his people skills were legendary. When he died in 2002, his viewing had to be expanded to two days and two nights, so admired and loved was he in the business world and in his personal life.
The Reitter household in which Fritz, Bobby and Jack came of age was rough and tumble, yet well-ordered and disciplined. Their mother, Elizabeth, gave birth to eight children, six of them active boys. (One of her sons was lost to a sudden-onset disease at age 4.) Elizabeth, now in a nursing home, had great managerial skills, her children recall.
"Mom was tough, and she let us know who was boss," says Bobby Reitter.
"When there was mischief, Mom often couldn't find the real culprit—and with so many boys around, there was plenty of mischief," remembers Jack. "So sometimes there was group punishment. You couldn't get away with much with Mom."
The three brothers who now are partners in Reitter Stucco & Supply recall that their initiation into the business came early, and often involved the least glamorous of jobs. Stucco is messy, and carrying it around in buckets wasn't loads of fun. The work also required adjusting to high standards and scant praise, the brothers say.
"Both my grandfather and my father were pretty demanding. If you did a good job but missed by about 10%, they reminded you only of the 10%," says Jack. "Because their own standards were so high, they wanted ours to be."
The learning curve
The Reitter brothers, whose two sisters never joined the company and chose other pursuits, were to learn that family businesses can take difficult turns.
Their grandfather had taught the brothers the importance of sticking together. "Our grandfather had a certain wisdom that we all remember," Fritz says.
The three brothers tell of their grandfather's reaction to a dispute that arose during the brief period when all five Reitter brothers worked in the business together. Gabriel Jr. presented a visual lesson none of the three has forgotten, although it happened about 35 years ago.
Grandfather Gabriel held up a piece of string—a lone strand—and pointed out how limp and weak it was on its own. Then he added four other strands, demonstrating that there is strength in unity.
But a five-brother partnership was not to be.
First to peel off was brother Gary Reitter, who left to become involved in an allied industry: homebuilding. Gary's new business actually helped the company, Fritz says. Gary referred customers to Reitter Stucco, and he has remained an ally.
But the departure of the firstborn Reitter brother after a dispute was very difficult for the company and the family. The exit of this brother—also named Gabriel—was the single lowest point the company has known. This, after all, was family.
"It was devastating for us all. It happened shortly after Gary had left. Gabe left us to open his own competing company," says Fritz. The rift with this oldest brother has never fully healed.
Rallying: Out of loss, gain
Despite this painful chapter—or perhaps because of it—the remaining brothers grew even more committed to the family business. They understood immediately that they had to come together, binding their sibling "strings."
"We had to really rethink the business and analyze one another's skills," Fritz says, "and it meant redefining roles. Bobby moves from field superintendent to operations manager, Jack had to add commercial estimating to his usual residential estimating, and I moved into the role of president."
Along with all that, the three remaining brothers had to reassure employees, vendors and customers that Reitter Stucco was not in jeopardy. "We knew we had to figure out how to move forward in the most efficient way," Fritz says.
As it happened, shortly after Gabe's departure, Reitter Stucco landed one of its largest projects ever with the construction of the Columbus Convention Center. Bobby, operations supervisor, took the job and ran with it. "We realized that if we could manage that, we could manage pretty much anything that came our way," Bobby says.
The past, even including the rough times, always has been a beacon, say Jack, Bobby and Fritz. When they think of their grandfather, they think of a man who taught them by example to get the company name out there, and to make sure that its performance matched its promises.
From their father and his big personality, they learned that highly developed social skills and human decency count mightily in business and in life.
Shortly after their father's death, a homeless man came into the office looking for him. Unbeknownst to others in the company, Dick Reitter had helped the less fortunate by hiring them to do odd jobs.
Surviving in a changing world
Today, Reitter Stucco & Supply generates annual revenues of $6.5 million and has about 50 employees.
In the Reitters' industry, as in most others, there have been material changes—quite literally for this company. Stucco has been supplanted and supplemented by newer materials, such as manufactured stone and thin brick exterior insulation.
In addition to the Columbus Convention Center, other major projects for Reitter Stucco & Supply Company have included the installation of an exhibition at the Columbus Center of Science and Industry, an expansion of the Nationwide Children's Hospital in Columbus, the Africa exhibit at the Columbus Zoo and Aquarium and the upscale Le Méridien Columbus, The Joseph hotel complex. Reitter was recognized as one of the nation's top contractors in each of the past two years by Walls & Ceilings, a trade publication.
After 100 years, this is a company that has been constantly challenged by outside circumstances, including the Great Depression, the 19% interest rates of the 1980s, which profoundly affected residential building, and other blips and crises in the real estate market.
Reitter has filled in the gaps with projects in the booming health care industry and by expanding into home renovation work.
The three brothers say they are trying to improve their work/life balance. Although they are very close, they rarely can manage to have lunch together and even find it difficult to all be in the same place at the same time.
The next generation and the future
The next generation of leaders waits in the wings. Reitter's current senior estimator and the office manager, who oversees human relations and accounting, will be part of the upper management team. The major players will be Fritz's son and son-in-law.
"The future is still a little foggy," says Kyle Reitter, "and we're still not certain about specific responsibilities. But I want to be ready. One thing is certain: I would hope to do anything to make the company succeed as it's done for the last 100 years."
"For now, preparing for the next chapter has mostly been focused on training," says Wilshire. One of the key issues, he explains, is the future availability of a willing and trained workforce in the construction industry. He says it has become more difficult to attract and retain young people interested in the field.
Along with that concern, however, Wilshire also feels a surge of optimism. With new technology and the use of social media, he says, "We will have an incredible opportunity to grow."
Although the details of how succession will proceed have not yet been determined, the three fourth-generation Reitter brothers are glad that the broad outlines have been drawn.
"Just a few months ago, we were all pretty unsettled. Now we've turned the focus knob on to the future and yes, it's a great relief," says Fritz Reitter. "We're all sleeping better!"
Sally Friedman is a writer based in the Philadelphia area.
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