DSM Industrial: A Question of Succession
(7 pages of text)
Case (Gen Exp)
In 2017, the chief executive officer (CEO) and chair of the board for DSM Industrial (DSM), a family-owned business in Newfoundland and Labrador, Canada, was considering his retirement. The company had been started by his father in 1964, and the CEO had worked there since he was 20 years old. Now he was planning on retiring within the next few years. However, he needed someone to take over the top-level management of his family’s commercial and residential construction business along with his roles as CEO and board chair. The company had many highly capable senior people with unique skills and vision—some were members of his family and others were long-time senior staff. If he chose an outside successor, would morale at the firm be affected? Would long-time employees leave? His successor needed technical skills to lead the company and maintain the culture. The decision was complicated by changes in the construction industry, the differing visions of senior management for the future of the company, the need to placate the needs of other family members, and the recent interest from outside parties in the possible purchase of DSM’s related companies. How would his family react to a sale, and how would the culture that he had invested so much time and effort in creating fare in the face of new ownership? Did his two positions need to operate separately? How would they interplay with one another? How could he solve his succession dilemma?
This case is suitable for upper-level undergraduate- or graduate-level courses on entrepreneurship, especially focusing on transition in owner-managed businesses and family-owned businesses. The case is better suited toward the end of the semester as an end-of-term, comprehensive assignment, or as a summative seminar discussion, but is also suitable for an executive training course. After working through the case and assignment questions, students will be able to
- understand the nuances of a family-owned business, including the maintenance of family ties and related party relationships;
- explain the concepts behind succession planning, including the need to maintain employee morale, ensure the smooth transition of management, monitor the assumption of roles by a competent successor, and preserve the company’s culture;
- recognize the concepts driving different succession choices; and
- consider the quantitative and qualitative factors involved in the sale of a business.
Canada, Medium, 2017
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