Succession and Culture: Successful Leadership Transitions at Cutco
One of the largest threats to a healthy culture is any transition of leadership. We have witnessed how a carefully developed and nurtured healthy culture can deteriorate when a new CEO or plant manager takes over leadership. This is why we have devoted this blog post to some techniques for ensuring a successful transition of leadership in a situation where maintaining a healthy culture was a major factor in choosing the new leader.
This is also our third blog post on Cutco. The preceding two blog posts focused on how the company changed its culture. Here, we will focus on who drove this culture change and how is was sustained over three leadership transitions.
In 1977, Erick Laine was assigned the role of president of Alcas/Cutco by its owner, Alcoa. He was given the assignment of turning around the struggling company. One could easily envision cost cutting and tight controls given the mandate he was under. But Erick brought a different style of leadership to Alcas/Cutco. Like Don Rust at the GM Tonawanda Engine Plant, Erick walked the factory floor personally, getting to know workers and their jobs. It did not take long for workers to respond to Erick’s personal style and his demonstrated respect for workers. Erick also built a strong leadership team that reflected his leadership style. In 1978, a labor contract was signed without a strike, something that hadn’t happened in a very long time. Trust between workers, union leadership, and management continued to grow, with many improvements to the work environment. Still, the U.S. economy in 1982 was in recession. Workers were concerned about their jobs. So, in 1982, when Erick and four of his managers bought Alcas/Cutco from Alcoa, workers viewed this purchase as Erick saving the company and their jobs.
In our previous two blog posts, we wrote about the many changes that took place in Cutco’s culture. In planning for succession, Erick took one of his executive team members, Jim Stitt, Sr., under his wing and mentored him about leadership and culture. Stitt, Sr. took over the management of manufacturing at Cutco and continued the employee-centric style of leadership. The two men worked in harmony to maintain the existing positive relationship with workers and grow the company.
Growth can be a two-edged sword. On the one hand, it created opportunities for employees through promotions and higher wages. But, at Cutco, there was a price to pay. From 1999 to 2002, the size of the workforce had doubled. In the words of Jim Stitt, Jr., “We grew so fast that we lost our focus on preserving the elements that made our culture special.” New supervisors didn’t understand the art of being an employee-centric leader and relied on top-down “do as I say” techniques of management. This led to an erosion of the culture, which ultimately led to a change in union leadership. The newly elected union president distrusted management and chose an adversarial approach to working with them. His negativity created a schism between workers and management.
After a few years of adversarial relations with the union, Cutco leadership was able to get things back on track. Several initiatives were taken, including a recommitment to an employee-centric leadership. With mentoring from Jim Sr., Jim Jr. spearheaded the effort to rekindle the old culture. This included training and coaching of supervisors that emphasized trust and respect for workers. In response to these efforts, the workforce elected a new union president, one who was committed to working with management and preserving a healthy organizational culture.
In 2008, Erick Laine retired from the company. Jim Stitt, Sr., shared Erick’s values and was strongly committed to the company culture. With Erick’s retirement, he became chairman and CEO, and his son Jim Jr. took over his former role as president of Cutco Cutlery, the manufacturing arm at Cutco. During Jim Sr.’s tenure as chairman and CEO, the company continued to grow, and the culture took on a greater community commitment by investing in community projects and supporting local institutions.
In 2016, Jim Jr. took over as the company CEO, while his father shifted his focus onto community development. The company had experienced substantial growth under years of leadership by Erick and Jim Sr. Realizing the need for change, Jim Jr. not only committed to the overall company culture but began a process of decentralizing decision making within his own management team. This empowered executives, giving them greater autonomy and greater commitment to the maintain company culture.
One last thought. Erick, Jim Sr., and Jim Jr. shared a commitment to an employee-centric culture. What they also shared was a commitment to be a great company as demonstrated by continued investment in growth and opportunities for all employees. Workers feel a sense of pride working for Cutco. They know they make quality products. They know they are a vital part of the company. They feel appreciated and part of a winning team.
Three transitions of leadership have enhanced the Cutco culture over a 40-year period. Each leader had challenges that needed to be overcome. Today, the company is not only profitable but continues to invest its profits in its growth, its people, and its community. Cutco has embraced the Golden Rule of Management through belief, trust, and respect for all its employees and creating a sense of belonging to a winning team. There is little question that its great culture has made this all possible.