- Email: [email protected]
manager of a job shop
sherwood onmanagement Observations on Being the Owner/Manager of a Job Shop
O
wner/ managers (OMs) of job hops are a diverse group with varied backgrounds and extremely different management styles. Many OMs inherited the fam.ily business and were not intellectually i nterested in it, bur they realize that they have been unable ro make as much money in other endeavors. Another eype, usually younger in age, come back into the company after being away and unsuccessfully attempting ro "find th emselves." If the OM is second- third- or even further down in the generation hisrory they typically do not have the initiative and motivation of the founding or purchasing generations. Most younger managers are brought up in an affluent environment and subconsciously assume that th e company and their income will march on infinitely as a neverending stream. These OMs do not have the insecure attitude of the company's founders or initial owners: that is, on Friday, the previous generation of OMs were afraid that the company would go out of business by next Monday or, if very little work comes in for a few days, that the end may be near. EDUCATIONAL QUALIFICATIONS
A puzzli ng trend i that many new OMs have college educations but not in a field related ro the business, such as engineering, chemistry, marketing, accounting, or business adminiscration. Many of them only considered their intellectual interest when selecting college majors, such as English, psychology, journalism, kinesiology (for the athletes), and, yes medieval history. www.metalfinishing.com
Srnaller job shops will rarely have professional managers since the owner will typically perform the management functions. As the shops grow larger, they can afford ro hire competent, well-educated, and experienced professionals. In several larger family businesses I have been acquainted with , the family welcomed the omsider, appreciating the additional profits that were generated. In others, the family resented the
salary paid ro the professional while failing to realize the incremental financial benefits, such as additional profits or dividends, that could accrue to the owners and emp loyees. A DIFFERENT TYPE OF OWNER
The background of OMs varies when the position and ownership is not inherited. Individuals buying a company and subsequently managing it typically have work experience in various professions, such as accounting, sales, journalism, employment within the trade or the purchased business, consulting, and very surprisingly even lawyers. In roo many cases, lack of knowledge of the craft and the trade practices of industries such as coating, painting,
plating, and fabrication will eventually cause failures or motivate the new owner to hire a manager. MANAGEMENT TECHNIQUES
Family-dominated companies generally have informal loose and undocumented procedures. Company policy is established based on how the bos feels at any given time. The inevitable inconsistency and in formality of rules and regulations can cause conflicts and jealousies. In contrast, family businesses in which the family is subordinate to the business or companies with profe sional managers- usually the larger job shops- have written company policies thar minimize preferential treatment of family employees. In the latter case, non-family employees are treated equally and can rise to upper-level positions within the organIzation. "FAMILY BUSINESS' OR "FAMIL Y BUSINESS" I don 't have detai led statistics because job shops are rarely publicly owned. Consequently, ownership information is difficult to obtain. In order to obtain some insight, I sampled the company membership listing of the Metal Finishing Association of Southern California for 2004. Through their listing of company officials, I calculated that 43% of all the captive and job shops are family owned and operated. It is likely that the percentage is considerably higher. By extension it is fair to conclude that the near-majority of surface finishing job shops in southern California and in the U. S. are family owned and op rated. My knowledge of job shops indicates that small and medium-sized job shops, categorized as up to 100 employees, are predominantly "family February 2009 I metalfinishing I 63
sherwoodonmanagement busin esses,'" wherein th e family is dominant and management practices are based on family employees taking importa nt company positions. Inevitably, jealousies occur among the family members ("they have a better car than we do") and rivalries fester between fan1i ly employees and nOI1family employees. Specifically, and typically, family members get special privileges, s u ch as coming in late, preferred parking places, and longer lunch hours. A real negative for this organizational structure is that non-fam ily employees have no future in the company because all of the key positions a re taken by family members. When family is dominant, the OM is a ben evolent dictator. D ictator, in that h e or she makes the rules and gives out the privileges as they wish. Benevolent, in that th e OM does t h ings for family that they would not do for nonfam ily employees. In th e end, t h ere is no discussion regarding th e dictator's decisions. In contrast, la rger "fam ily businesses" typ ically wi II subordinate the family to the business. In this system, promotions and wage structures are merit-based rather than via family status. Good business practices are
esta blished, and adherence to company policy is mandatory. I previously encountered a uniqu e family management style. It was estab li s h ed in a fam ily bu ines wh ere three third-generation brothers ran the company a a tight group. Virtually every decision, down to miniscule decisions s uch as the buying of penci ls a nd to il et paper, was made by discuss ion resulting in consensus. There were no separate offices o r cub icles; a ll business was carried out in one large room with three desks and th ree telephones. THE OM CASTS A SHADOW
I have been continuous ly intrigued by my observation that the morals and management style of the OM or professional man ager a re fo llowed by virtually a ll employees withi n a particula r company. It rarely fai ls: when th e OM is q u iet, poli te, a n d honest, th e emp loyees are very similar in their attitudes and actions. When t h e boss yells and screams and is overbearing, you will find subordinates doing the same. If the boss is well mannered and practices positive reinforcement, rather than em barrassing pu b lic reprimands, th e sam e mannerisms wi ll be found among the company's employees. JOB SHOP ADVANTAGES AND DISADVANTAGES
Even w hen I was a successful job shop owner, I frequently wondered wh y anyone wOLlld want to be in t h is type of bLlsiness. Amo ng t h e disad vantages J can reme m ber and h ave been told:
Hot Dip Strippable Plating Mask Kit CIU II , Sh.lrp . dls tlll e l stop o ff lilies. Kil wllh I
( IUMI
pot ,m d S ibs. of Therm o,Co lc N ·4 slripPdble CO"I'lIg . Cool fois t 10 8, \I( yf'l u perfect ma sk. Non ·ConfJlI1l1ul II1g . Peel o f( ol nd remelt for reu sc. Wrile for deldll s And
prices .
~-~:c
6 Park Drive · P.O. Box 365 • Franklin, J 074 16 Tel: 973-209-6210 · Fax: 973-209-6435 Circle 044 on reader infor mation card or go to www.meta tfi nish ing.com/advertisers
64 I metalfinishing I February 2009
• You can't make long-range plans because your customers will rarely provide you with their long-range production schedules. • As for pricing, job shop owners chronically complain about their unscrupulous and unwise competitors who obviously don't know how to quote or price. • Suppliers control the equipment, processing developments, and for-
mulas utilized, particularly in coating and plating. • Turnaround times are very short. They can get very close to "in by 10, out by 4." • Customers never send defective, pitted, or scratched parts for processing. It's always the job shop's responsibility.
There are many advantages to job shop ownership: • Costs to buy or start a business are small compared to manufacturing. • Inventory requirements are minimal. • Prices can vary with volume and material costs. • Catalogs with annual fixed pricing are not required. • Costs for marketing, advertising, and research and development are almost non-existent. • No distribution or warehousing is required. IN SUMMARY
Job shops are dominated by family ownership and management. The manage ment techniques vary from the simplest dictatorial approach in the smaller companies to the highest leve l of sop hi sticated organization in the larges t companies. Currently, most are being heavily impacted by competition from foreign sources, in addition to the severe economic recessions being experienced both domestically a nd globally. The job shops that will survive are those that have s u p rior management, competent m a rk et in g, innovative techniq u es, and financ ial reserves. NOTE
1. Sherwood B]. Family bu siness or fa mily business? W h ich is it? What sh ould it be? Metal Finishing 2007;105(12): 50-1.
BIO
Bert] Sherwood) M.5. in Ch.E.) is a consultant who has provided business and technical counsel to surface finishing and manufacturing companies for more than 24 years. He can be reached at [email protected]. WINVV.met alfinishing.com
O
wner/ managers (OMs) of job hops are a diverse group with varied backgrounds and extremely different management styles. Many OMs inherited the fam.ily business and were not intellectually i nterested in it, bur they realize that they have been unable ro make as much money in other endeavors. Another eype, usually younger in age, come back into the company after being away and unsuccessfully attempting ro "find th emselves." If the OM is second- third- or even further down in the generation hisrory they typically do not have the initiative and motivation of the founding or purchasing generations. Most younger managers are brought up in an affluent environment and subconsciously assume that th e company and their income will march on infinitely as a neverending stream. These OMs do not have the insecure attitude of the company's founders or initial owners: that is, on Friday, the previous generation of OMs were afraid that the company would go out of business by next Monday or, if very little work comes in for a few days, that the end may be near. EDUCATIONAL QUALIFICATIONS
A puzzli ng trend i that many new OMs have college educations but not in a field related ro the business, such as engineering, chemistry, marketing, accounting, or business adminiscration. Many of them only considered their intellectual interest when selecting college majors, such as English, psychology, journalism, kinesiology (for the athletes), and, yes medieval history. www.metalfinishing.com
Srnaller job shops will rarely have professional managers since the owner will typically perform the management functions. As the shops grow larger, they can afford ro hire competent, well-educated, and experienced professionals. In several larger family businesses I have been acquainted with , the family welcomed the omsider, appreciating the additional profits that were generated. In others, the family resented the
salary paid ro the professional while failing to realize the incremental financial benefits, such as additional profits or dividends, that could accrue to the owners and emp loyees. A DIFFERENT TYPE OF OWNER
The background of OMs varies when the position and ownership is not inherited. Individuals buying a company and subsequently managing it typically have work experience in various professions, such as accounting, sales, journalism, employment within the trade or the purchased business, consulting, and very surprisingly even lawyers. In roo many cases, lack of knowledge of the craft and the trade practices of industries such as coating, painting,
plating, and fabrication will eventually cause failures or motivate the new owner to hire a manager. MANAGEMENT TECHNIQUES
Family-dominated companies generally have informal loose and undocumented procedures. Company policy is established based on how the bos feels at any given time. The inevitable inconsistency and in formality of rules and regulations can cause conflicts and jealousies. In contrast, family businesses in which the family is subordinate to the business or companies with profe sional managers- usually the larger job shops- have written company policies thar minimize preferential treatment of family employees. In the latter case, non-family employees are treated equally and can rise to upper-level positions within the organIzation. "FAMILY BUSINESS' OR "FAMIL Y BUSINESS" I don 't have detai led statistics because job shops are rarely publicly owned. Consequently, ownership information is difficult to obtain. In order to obtain some insight, I sampled the company membership listing of the Metal Finishing Association of Southern California for 2004. Through their listing of company officials, I calculated that 43% of all the captive and job shops are family owned and operated. It is likely that the percentage is considerably higher. By extension it is fair to conclude that the near-majority of surface finishing job shops in southern California and in the U. S. are family owned and op rated. My knowledge of job shops indicates that small and medium-sized job shops, categorized as up to 100 employees, are predominantly "family February 2009 I metalfinishing I 63
sherwoodonmanagement busin esses,'" wherein th e family is dominant and management practices are based on family employees taking importa nt company positions. Inevitably, jealousies occur among the family members ("they have a better car than we do") and rivalries fester between fan1i ly employees and nOI1family employees. Specifically, and typically, family members get special privileges, s u ch as coming in late, preferred parking places, and longer lunch hours. A real negative for this organizational structure is that non-fam ily employees have no future in the company because all of the key positions a re taken by family members. When family is dominant, the OM is a ben evolent dictator. D ictator, in that h e or she makes the rules and gives out the privileges as they wish. Benevolent, in that th e OM does t h ings for family that they would not do for nonfam ily employees. In th e end, t h ere is no discussion regarding th e dictator's decisions. In contrast, la rger "fam ily businesses" typ ically wi II subordinate the family to the business. In this system, promotions and wage structures are merit-based rather than via family status. Good business practices are
esta blished, and adherence to company policy is mandatory. I previously encountered a uniqu e family management style. It was estab li s h ed in a fam ily bu ines wh ere three third-generation brothers ran the company a a tight group. Virtually every decision, down to miniscule decisions s uch as the buying of penci ls a nd to il et paper, was made by discuss ion resulting in consensus. There were no separate offices o r cub icles; a ll business was carried out in one large room with three desks and th ree telephones. THE OM CASTS A SHADOW
I have been continuous ly intrigued by my observation that the morals and management style of the OM or professional man ager a re fo llowed by virtually a ll employees withi n a particula r company. It rarely fai ls: when th e OM is q u iet, poli te, a n d honest, th e emp loyees are very similar in their attitudes and actions. When t h e boss yells and screams and is overbearing, you will find subordinates doing the same. If the boss is well mannered and practices positive reinforcement, rather than em barrassing pu b lic reprimands, th e sam e mannerisms wi ll be found among the company's employees. JOB SHOP ADVANTAGES AND DISADVANTAGES
Even w hen I was a successful job shop owner, I frequently wondered wh y anyone wOLlld want to be in t h is type of bLlsiness. Amo ng t h e disad vantages J can reme m ber and h ave been told:
Hot Dip Strippable Plating Mask Kit CIU II , Sh.lrp . dls tlll e l stop o ff lilies. Kil wllh I
( IUMI
pot ,m d S ibs. of Therm o,Co lc N ·4 slripPdble CO"I'lIg . Cool fois t 10 8, \I( yf'l u perfect ma sk. Non ·ConfJlI1l1ul II1g . Peel o f( ol nd remelt for reu sc. Wrile for deldll s And
prices .
~-~:c
6 Park Drive · P.O. Box 365 • Franklin, J 074 16 Tel: 973-209-6210 · Fax: 973-209-6435 Circle 044 on reader infor mation card or go to www.meta tfi nish ing.com/advertisers
64 I metalfinishing I February 2009
• You can't make long-range plans because your customers will rarely provide you with their long-range production schedules. • As for pricing, job shop owners chronically complain about their unscrupulous and unwise competitors who obviously don't know how to quote or price. • Suppliers control the equipment, processing developments, and for-
mulas utilized, particularly in coating and plating. • Turnaround times are very short. They can get very close to "in by 10, out by 4." • Customers never send defective, pitted, or scratched parts for processing. It's always the job shop's responsibility.
There are many advantages to job shop ownership: • Costs to buy or start a business are small compared to manufacturing. • Inventory requirements are minimal. • Prices can vary with volume and material costs. • Catalogs with annual fixed pricing are not required. • Costs for marketing, advertising, and research and development are almost non-existent. • No distribution or warehousing is required. IN SUMMARY
Job shops are dominated by family ownership and management. The manage ment techniques vary from the simplest dictatorial approach in the smaller companies to the highest leve l of sop hi sticated organization in the larges t companies. Currently, most are being heavily impacted by competition from foreign sources, in addition to the severe economic recessions being experienced both domestically a nd globally. The job shops that will survive are those that have s u p rior management, competent m a rk et in g, innovative techniq u es, and financ ial reserves. NOTE
1. Sherwood B]. Family bu siness or fa mily business? W h ich is it? What sh ould it be? Metal Finishing 2007;105(12): 50-1.
BIO
Bert] Sherwood) M.5. in Ch.E.) is a consultant who has provided business and technical counsel to surface finishing and manufacturing companies for more than 24 years. He can be reached at [email protected]. WINVV.met alfinishing.com