A fluid sibling partnership
The third-generation Flottman Company has kept moving forward in a challenging industry under a rotating presidency. Whether that leadership scheme will continue is an open question.
The Flottman Company, a 91-year-old commercial printing firm near Cincinnati, found a unique way to balance the ambitions and desires of three siblings with the leadership needs of a company in an embattled industry. The firm did it with a Solomon-esque management succession plan that calls for rotating the president’s job among the three third-generation owners of the company. The plan has worked well for 20 years, but the next scheduled transition may not take place.
The Flottman Company has its roots in the commercial printing industry, but it doesn’t describe itself as a printing company anymore. Rather, it’s a “marketing solutions provider,” according to the company president, Sue Flottman Steller. “We do ink on paper like commercial printing —brochures and things like that—and pharmaceutical printing,” Sue explains. “But we also take technology and intertwine it with social media, the digital world and direct marketing.” Pharmaceutical printing is the company’s bread and butter, accounting for more than half its annual revenues, followed by traditional printing jobs in numerous formats. But digital marketing services like cross-media campaigns that use print, web and mobile technologies such as QR codes are growing rapidly, according to CEO Tom Flottman, Sue’s eldest brother.
Gen 3’s mission: ‘Run with it’
The company got its start when their grandfather, printer F.E. Flottman, lost his job because the Molitor Stove Company, where he worked, was purchased by another company that had its own advertising and printing operation. Instead of looking for a new job somewhere else, the entrepreneurial founder bought the equipment he’d been using and set up his own shop in 1921. His son, Rod, joined him in the 1940s and became president in 1968. Rod, father of the current owners, oversaw the company’s evolution into a full-color lithographer.
Having grown up in the business, Rod knew printing technology inside and out, but he also knew how to respond to customer needs. When a large pharmaceutical manufacturer asked for help in meeting new Food and Drug Administration requirements to include leaflets with each package in the 1970s, Rod acquired the specialized machinery and know-how to micro-fold tens of millions of inserts and developed a strong niche in the business.
The company grew steadily in the years that followed, according to Tom. “We had eight people with $300,000 in sales in 1973 when I graduated from college,” he says. By 1998, sales had reached $2 million. Today, the company has about 45 employees and generates $6 million in annual sales. It operates a 20,000-square-foot plant in Crestview Hills, Ky., a suburb of Cincinnati. Printing Industries of Ohio and Northern Kentucky, a trade association, named the Flottman Company its 2011 Printer of the Year; in 2010, the University of Cincinnati honored the firm with the Tri-State Family Business of the Year Award.
Rod Flottman and his wife, Sally, have six children. All worked in the company as they grew up, but three—Tom, Sue and Peter—decided to make it their careers. When he retired in 1992, Rod wanted to transfer ownership to the three of them (providing for his remaining children otherwise in his estate planning), but he didn’t want to dictate how they operated. “I gave them the business and said, ‘Run with it,’” recalls Rod, now 86. “I left them alone, and they’ve done great.” He did, however, have some strong suggestions.
“My father came to us and said, ‘You’re going to have to figure out your remuneration and who’s going to be the leader,’” Tom, 60, explains. Ownership was divided in three equal parts when Rod gave them the company. “He suggested we should all make the same amount of money,” Tom says. “That’s generally not the best idea, because there are different talents and work ethics, but we’ve somehow managed.”
Sue, 52, adds, “We talked about who was going to be president and how it would evolve. We decided at the time that Tom was better suited to the role but that after ten years it would be good for the company to have somebody new come on and bring fresh ideas and possibly a new approach.” Tom was president from 1992 to 2002; Sue took over in 2003 and Tom moved up to the newly created position of CEO. Peter, 48, is unofficially slated to become president next year.
“We all were very capable,” Sue points out, “but we had different experiences at the time [Rod] retired. It really worked for us all.” She adds another big advantage to the plan: “Interestingly enough, we are about the same age when we take on that role [as president].” Tom was 40 when he assumed the title; Sue was 43.
“We kind of mentor each other,” Sue explains. “You learn from the person in front of you and you have someone to go to when you need some guidance.”
“Bottom line, titles don’t really matter,” Tom says. “The three principals own equal amounts of the company and make major decisions as a group. We each gravitated in the direction where our interests and talents lay and where we were needed.”
Tom’s interests are sales and strategic planning. “When I graduated,” he explains, “we needed more top-line revenue, so my dad said, ‘Here’s a briefcase and some calling cards.’ I soon gave myself the title of ‘sales manager,’ and we hired some more salespeople. Next thing you know, we’re building a new building.” Today Tom continues to handle key accounts representing about half of the company’s revenue. “When I was president,” he says, “I saw the need for organizational development and strategic planning, so I went in that direction.”
Lesson #1: Sales
Rod made sure all three siblings got valuable sales experience, whether they wanted it or not. “If they’re out there beating on customers’ doors,” he says, “it gives them an idea of what has to be done.”
Sue was an eager acolyte. “When I worked in the office, I was intrigued by what the salesmen did,” she says. “One evening at home, I told my father that I thought sales would be fun to do. Within a couple of days I had calling cards. After graduation, I moved into sales.” Today, even with her title of president, Sue concentrates primarily on sales and marketing. “I work with the salesmen on prospecting and building accounts,” she says. The company has a marketing committee, but there is also a marketing director who reports to Sue.
Peter, the youngest, worked in the accounting department when he got out of school, did some production management and also worked in sales. He says, “Dad kind of shoved me out the door and said, ‘Go make some calls.’ I’m not the salesman type, but at least I have an understanding of how hard that salesman’s job is.” Peter found his satisfaction in another direction. “I’m very inward-facing,” he says, “I’m in charge of the company’s accounting and finances. The production manager reports directly to me. I’m in charge of operations and how the plant runs.”
The three work closely together, according to Rod. “Each one has a special interest and qualifications that complement each other,” he says. “No matter which way you mix them up, they work together.”
As Peter explains, “Our job functions have always been intertwined. We work on each other’s strengths. I’m not the salesperson, Tom is. When he’s out there, he’s not technically minded. He’s good at the customer interface, I’m good with the technical side. I give him what he needs to do his job. Sue is the same way. I handle some accounts and I’ll go in to her when I’m faced with a situation and ask, ‘How would you deal with this?’ We support each other that way.”
Time for a title change?
All three siblings like what they do, which raises the question of whether Peter will become president next year. “We put this into place many years ago,” Peter muses. “We can do it, but why does it need to be done? What advantage is there? Honestly, in the role that Sue plays here and in the industry, I’m not sure it needs to change. I’m the secretary-treasurer and the CFO. That works well with our financial backers. I haven’t discussed this with her and Tom, but I’m not sure the titles need to change.”
Peter also points out that even though the basic responsibilities of each sibling wouldn’t be modified if he succeeds Sue, he would have some additional tasks. “There are certain things the president needs to sign off on. On a company cultural level, I’ll have to conduct the company meetings, telling the employees what’s going on, where we are, where we’re going, and what opportunities and obstacles are there.” He says he’s not sure he’s the person best suited for that role.
When asked to comment on Peter’s thoughts, Tom becomes reflective. “What’s in a title?,” he asks. “Maybe having one of the lead roles doesn’t appeal to [Peter]. If he’s thinking that way, maybe we should have a conversation about it.” He adds, “Everybody’s doing a good job. If we want to continue with me as CEO, Sue as president, and Peter as controller and VP-operations, that’s certainly OK with me.”
Tom also points out that both he and Sue may be looking at retirement around the same time—although that’s some years away—which would leave Peter on his own in a job he might not really want. “It’s entirely possible we could hire a president and keep Pete in the position where’s he’s happy,” Tom says. “But that’s a conversation that would take place way down the road.”
Larry Grypp, president of the Goering Center for Family & Private Business at the University of Cincinnati, says the Flottman succession plan has worked for them for a simple reason. “They build consensus,” he says. “The Flottmans have excellent communication both within the family members and with the management team and employees. That sounds fundamental, but it’s not [universal] within family businesses. Often there is a lot of dysfunction.”
The Flottmans don’t hesitate to use resources like the -Goering Center, which Rod was instrumental in founding. Both Sue and Peter went through the center’s leadership development program and regularly attend topical meetings. Tom serves on the board. Last year, he was recognized as the center’s volunteer of the year. Numerous Flottman employees also attend workshops and training provided by the center.
One thing the Flottmans have learned, whether from the center, their father or the stern teacher of experience, is to look ahead. “They review their strategy and the systems that support it regularly,” Grypp observes. “They are very disciplined that way. Their strategy constantly evolves.”
They are now looking at governance and composition of the board, which currently consists of the three siblings. “That’s one of those areas we will probably need to address in the next few years,” Sue says. “As we mature personally and the company continues to grow and expand in multiple areas, we may need outside people to come in and help.”
There is also the fourth generation to consider. “At this point, I don’t think there’s going to be any change in ownership,” Sue says. “We would love it if members of the fourth generation came forward to take over. It hasn’t happened so far, but that doesn’t mean it won’t. We all have young adult children who have careers that will give them backgrounds that would help them here. We’re careful about not forcing or pushing them.” The three siblings have a total of nine children, most of whom are in their twenties.
“Our biggest challenge is the fourth generation,” Tom acknowledges. “Fortunately, they’re not going to be handling the reins anytime soon. But it’s going to work itself out. We want them to get three to five years of experience elsewhere and a master’s degree. Some of them are doing that now.”
The more immediate question of who will hold the president’s job next year is still unanswered, but as Peter points out, “This was a decision made 20 years ago. It’s fluid. There is nothing guaranteed in life except change.”
Dave Donelson is a business writer in West Harrison, N.Y. He is the author of the Dynamic Manager Guides and Handbooks.
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