One of the most difficult challenges for a dealer-principal who has poured his or her heart and soul into nurturing and growing a successful equipment dealership business is to step aside and let someone else watch the store. But the leadership team at Cervus Equipment believes this step is absolutely vital at some pre-determined point to make a succession plan work.
When one or even two people are the sole driving force behind the success of a dealership, often times they can't quit because they haven't planned for or developed a successor.
This is getting to be a bigger issue for the farm equipment business as dealerships grow to multi-million dollar businesses, says Graham Drake, president and CEO of Cervus Equipment.
"Many of these multi-store groups have revenues of $100 or 200 million, often times with owners who have been involved in the business for decades. Are they thinking about succession and if they have enough people to lead that business so they can leave their investment in and still have that business running? Too often in cases like these, they wait too long and when there's a leadership change it becomes a traumatic event for the business, the employees and the customers. This doesn't have to be the case," says Drake.
One of Cervus Equipment's major objectives is to avoid just such a scenario as they make succession planning an ongoing process. Graham, who recently took on the CEO responsibilities at Cervus, a 30-store equipment dealership group headquartered in Calgary, Alberta, says that no one person represents this company's "heart and soul."
"We can't afford to have one or two people driving the Cervus bus. We wouldn't be able to operate at the scale we are today," he says.
Maintaining the Culture
Peter Lacey, who along with Drake is one of the founding partners of Cervus Equipment, says they may be held to a higher standard because it's a publicly held company succession planning needs to be a top priority for any dealership group, as people are always going to come and go. The value of succession planning is to maintain the culture of a successful business regardless of who's leading it. He uses Cervus' major supplier as an example.
"John Deere is celebrating its 175th anniversary this year and it's a company with a lot of great people. But people within John Deere come and go, and it's still the same company regardless of who comes and goes because of its emphasis on succession. This demonstrates that it's the culture that's important, not the individuals," says Lacey.
"How Cervus treats its people and how it treats our suppliers is going to be the same whether Graham and I are at Cervus or not. That's because we know what we stand for and what values guide this company. Our board of directors endorses this wholeheartedly, which means our culture transcends individuals. Whether or not Peter Lacey, Graham Drake or whoever is running the company, it won't change a thing about how we conduct our day-to-day business. I absolutely know it won't change a thing."
An essential facet to how the company stresses succession planning is its leadership development programs, which are aimed at giving its employees a career path within the company.
Practicing What They Preach
Evidence that Lacey and the executive team at Cervus practice what they preach when it comes to succession planning and leadership development was recently demonstrated.
At the company's annual general meeting in April 2012, it was announced that Lacey would take on the role as executive chairman of Cervus' board of directors, which will facilitate Drake's move into the position of president and CEO.
Lacey, who is only in his 50s, decided this was a strategic time to make the move. "Succession planning and leadership development are key elements of Cervus' corporate culture," Lacey says. "Cervus initiated a CEO succession plan more than two years ago to ensure a smooth transition and strategic continuity. Given Graham's involvement in Cervus' operations from the beginning, I'm confident he will successfully perpetuate Cervus' culture and vision and is the right choice to execute on the next phase of the company's growth strategy."
Drake began his career at John Deere Ltd. and held several positions in which he was responsible for dealer and customer product service, sales and marketing, as well as credit management. He joined Agland Equipment Ltd., a John Deere dealer, in 1992, serving as sales manager for three years. In 1996, he partnered with Lacey and became an owner and general manager of Agrotec Farm Equipment Ltd., a John Deere dealership in Central Alberta. Drake joined Cervus at its inception in 1999.
Speaking of stepping aside to allow Drake to take on the CEO role, Lacey says it is also a matter of fairness and seeing others you're working with having the opportunity to show their stuff.
"Our senior management team's not much different in age than I am," says Lacey. "If I hang around until I'm 62 or 63, it doesn't give any of them an opportunity to lead the company, implement fresh ideas and provide new leadership. It's healthy for a company. I'll still be involved. I'll still be a significant owner of the company, have some influence on strategy and be relevant to the organization. But I don't want to step on Graham's toes.
Considering the success Cervus has achieved through its first dozen years as an entity, above all, the senior leadership team believes they must maintain the culture that's led them so far.
Lacey describes the Cervus culture as one of "mutual respect, a sense of accountability and performance that's applied to customers, suppliers and employees alike."
With that in mind, Drake explains this is why the company puts so much emphasis on promoting from within. "We've all read about a CEO who comes from the outside of a company and dramatically changes the business. That's often a fear for shareholders, especially when the company has been successful.
"Anyone new who's coming in at that level creates fears throughout the organization. So the whole structured succession process we practice here hopefully allays some of those fears," says Drake. "If we do a good job of succession planning, 90 or 99% of the time it's going to be an internal person."
He adds this applies to Cervus' OEMS, as well. "If their experience with their dealer indicates that the next leader will be someone the supplier knows, it will allay some of those fears that as a public company, we're going to change things more than maybe a private company would. They're always looking at who's going to lead their bigger dealers down the road," Drake says.
More evidence that Cervus is intent on developing its future leaders and promoting from within was presented when it named Cal Johnson as its new vice president of agriculture to replace Drake. Johnson joined the company in 2000 and was most recently general manager of Cervus' 10-store Agro Equipment group.