You’ve probably heard the statistic before: Seventy percent of established family businesses won’t make it to the next generation. Only 10 percent make it to the third genera- tion. With the fifth generation of Holt family members taking their place as leaders in the business, Holt CAT has certainly beaten the odds when it comes to business succession. Any dealer who wants to ensure that his or her family-owned business continues, might want to note how the San Antonio, Texas-based Caterpillar dealer is handling this important task.
Corinna Holt Richter and Peter John Holt, the daughter and son of CEO Peter M. Holt, are the heirs apparent to HOLT CAT, the latest generation to work in the family’s construction equipment business that began with their great grandfather, Benjamin Holt, who also famously developed the first practical track-type tractor in 1904. His company later merged with Best Trac- tor to form the Caterpillar Tractor Co.
"CAT, more than any company, has invested in making sure that there is continuity across generations," said Marion McCollom Hampton, senior partner with Banyan Family Business Advisors, located in Cambridge, Mass. "They don’t want a disruption in their dealer network." Banyan has worked with the Caterpillar dealer families for more than 30 years on this issue, and Hampton provided guidance to the Holt family as they worked through the complicated process of business succession.
According to HOLT CAT President and Chief Operating Officer Allyn Archer, the question, "What is your succession plan?" was a topic of discussion in meetings with the manufacturer.
"There is comfort knowing that we now have one," said Archer. "And excitement. Change for some people is difficult. There is fear. I haven’t seen that with this change. Everyone knew that there would be change of the guard."
| A Chronology of Family-Business Leadership |
Benjamin Holt
Developed the first practical tracktype tractor in 1904. His company,
Holt Manufacturing, merged with Best Tractor to form Caterpillar Tractor Co.
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William K. Holt
Son of Benjamin Holt forms Texas dealership, William K. Holt Machinery Co. in 1933
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B.D. Pete Holt
Nephew of William K. Holt joined the dealership in the mid-1950s. B.D. Holt purchased the 20 Southern counties of the territory to form B.D. Holt Co. in 1961. Another nephew, Holt Atherton, purchased the 40 Northern counties and formed Holt Machinery Co. in 1963.
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Peter M. Holt
Oldest son of B.D Holt joins the company in 1983. In 1985 he is appointed Caterpillar dealer for the western half of Ohio. In 1987 he and his father purchase controlling interest in Holt Machinery Co., forming the Holt Company of Texas. Purchases Darr Equipment Co. in 2002, the Caterpillar dealer of North and East Texas, renames the company HOLT CAT.
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Corinna Holt Richter and Peter John Holt
In 2012, after completing their training programs, Peter’s daughter Corinna is named general parts manager and son Peter John is named general service manager.
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Working in the Heart of the Business
Despite their young age, Corinna, 29, and Peter John, 26, are relishing their roles at HOLT CAT. Corinna is general parts manager and Peter John is general service manager for the machine division of HOLT CAT. According to Archer, their placement at the heart of dealer’s business is no accident. "That’s a wonderful training ground for them," said Archer. They work with seasoned veterans and report to Ron Craft, vice president of Product Support.
Corinna joined the business in 2011, after the family worked with Hampton to set up a family council, define their goals, and to establish a time frame for the Next Generation to join the company. "It was so important to keep it structured," said Corinna.
According to Hampton, one of the most difficult parts of business succes- sion is sitting down and having an open conversation about the future. "If the two generations can’t talk together well enough then they can have radically different assumptions about the process," she explained. "We help them become intentional, disciplined, and face the decisions in a timely way."
A Vanderbilt graduate, Corinna’s decision to leave a career at Sotheby’s in New York was motivated by a desire to move back to San Antonio. A business program at NYU and a year rotating in different positions throughout HOLT CAT helped prepare her for her current role.
"My real preparation took place in my first year as I rotated through every department," she said. "It not only helped me understand what we do and how we do it, but I was able to start building meaningful relationships with people."/p>
Peter John earned his business degree from the University of the Incarnate Word in San Antonio in 2011. He joined the company a few months after Corinna and also rotated throughout HOLT CAT. He also spent four months in Caterpillar’s marketing training class in Peoria, Ill.
Both Corinna and Peter John appreciate their family’s willingness to let them pursue any career path, but at the same time, they have been included in discussions concerning the family business since high school.
While Corinna and Peter John may have worried about being accepted in their new roles, their concerns were quickly alleviated. Corinna credits it to the core values of the entire team. "There has been an openness and willingness to help. It has been a great experience," she commented.
"The five guys who report directly to me are incredibly open yet demand- ing," said Peter John. "They hold me accountable, but at the same time nurture me. It’s a testament to our organization and the culture that has been built here."
Values-Based Leadership Builds a Strong Company Culture
Values-based leadership is more than just a saying hung on a wall at HOLT CAT. According to Archer it was launched in 1988 to bring direction to an organization that had five compa- nies and 3,500 employees scattered over the U.S and Canada. "We were growing," said Archer, "but we lacked direction. We didn’t have a vision and we didn’t know what our mission was, we didn’t have our values captured, because we didn’t write it down."
"Over time we developed a culture of people that adhere to our values as an organization," continued the 40-year veteran who began as a technician at B.D. Holt Co. "Ourfirst value is ethical, "doing the right thing." This differentiates our company from others.
Peter John understood and believed in the values in theory, but as he works in the business they have become second nature. "You can very literally take a situation and look at the values, run it through that filter and your decision becomes black and white," he said.
"It’s our road map," added Corinna. She believes training and leader- ship development are the keys to a good succession plan. Corinna and Peter John participate in HOLT CAT’s two-year leadership development program run by Larry Mills, executive vice president of organizational and personal development. Mills heads Holt Development Services, which helps companies of all types develop their mission, vision and values.
"The most important thing I can do is to focus on being well rounded, to have a good understanding of everything. I can’t know it all. I need to know who to go to, who to talk to, who to trust," said Corinna. It’s a lesson she’s learned from her father. According to Archer, Peter M. Holt tells the story that he was a parts and service guy one week and the next week he was president of the company. "This transition is much more thought out and will benefit the entire organization," said Archer.
Describing herself as a team player, Corinna is focused on bringing process improvements to the company’s "legendary customer service." "My father has a saying, "None of us are as smart as all of us."
While Corinna is known for being cautious and analytical, Peter John describes himself as direct. "I speak my mind," said Peter John. "When we work on things together it’s a good mix."
Peter John is focused on leveraging technology to enhance the customer experience and improve operational excellence. He is also focused on the societal and marketplace issues surrounding the skills gap and lack of awareness of opportunities in voca- tional trades.
"They are very quick learners and intelligent," said Archer. "They have shown themselves to be good decision-makers."
Both say their relationship with their father has changed somewhat since they joined the business. "I was able to see him in a different light," said Peter John. "We are father and son but more friends, partners or peers."
"It is nice to connect with him on another level," said Corinna. "To have a conversation about the business that is two-way. I have enjoyed that."
With their father not working in the business every day, it has been easier for them to find their own way.
For a succession plan to work Archer believes it must be noncon- frontational and done in total agree- ment. "It has to be a win-win situation for both the outgoing generation and the incoming generation. It takes some process work on both sides to gain agreement."
Begin Early
According to Hampton, one common problem among businesses is that they don’t start thinking about a succession plan early enough.
"The process of generational continuity takes years," she said. "You should start working on it 10 years before you think about getting ready to retire. People don’t want to think about it that far ahead."
Business succession is a complicated process involving business, ownership and family issues that can take years to resolve. This is especially true if there are many family members whose interests must be considered.
Since Peter M. Holt took over the business in 1984, the company has gone from being the smallest Caterpillar dealer in the world, to the largest in the U.S. HOLT CAT currently employs more than 2,000 people throughout Texas and Arkansas. In addition to the Texas Caterpillar dealership, the company owns Holt Crane and Equipment, an authorized dealer of LinkBelt Cranes, and Holt AgriBusiness, which repre- sents Challenger farm equipment and Lexion Combines in portions of Texas and Arkansas.
Many challenges lie ahead for the fifth generation leaders. They joined the company at a time of tremendous growth. HOLT CAT plans to open an additional 10 facilities throughout Texas in the next three to four years, and the new leaders have a big responsibility in making that a success. While Corinna and Peter have committed themselves to doing what they need to do to prepare for future ownership, the timetable for ownership transfer at this point isn’t finalized.
"Ultimately it is up to all the stake- holders involved, especially the current owners, Caterpillar and all the brands we represent," said Peter John. And while Peter M. Holt has provided his children with the train- ing and support needed to succeed, perhaps the greatest gift to these future owners is a strong company culture nurtured by practicing its mission, vision and values, day-in and day-out.