Life on a family
farm can be hectic and at times seem out of control. Much of the activity
is fast-paced and decisions need to be made quickly. This reality
can keep many family farm operators from attending to the basic needs
of the business.
Developing
a structure
Job descriptions
for all family members involved with farm work, including a definition
of the role of board members, are a necessity. Job descriptions set
the boundaries of each person's responsibility and designate individuals
as the primary holders of certain information. Job descriptions are
not straight jackets, they provide guidelines that define how and
by whom the work will get done.
Cross-training employees help you identify the information needed
to run the operation and helps you figure out what areas need backup
support. Having two people trained to do the same job (although one
person holds the primary responsibility) lets employees and managers
know who to call if an employee is absent, instead of frantically
searching for someone to fill in.
Plan for major events, whether they are purchases of equipment, building
or renovating a structure, doing major maintenance work, etc. There
never seems to be enough time to get anything done, and often it takes
a crisis before something finally happens. If you use part of a scheduled
meeting to brainstorm about the items that need to be taken care of,
and prioritize those items, then you are providing yourself with useful
guidelines for the work to be carried out over the next 3- to 6-month
period.
Vision
statement
This document
will say why you are doing what you are doing and how you want to
see it get done. This statement should reflect family members' ethics
and values that guide business operations. This is especially important
for family owned businesses because it clarifies the reason why you
are in a family business. Is there something about your family's history
or the way you run the operation that is important to you? These family
concerns can be incorporated into the vision statement and serve as
a guideline for making major decisions on issues such as hiring, land
use practices, and long term growth plans. It doesn't take a tremendous
amount of time to develop a vision statement; however, it takes a
good deal of thought. Once you've started to talk about your vision,
it is easy to write the statement.
Unique
Dynamics
There are unique
dynamics that operate in a family business. Many management consultants
tell people to separate their family lives from their business lives,
and only make decisions based on one set of concerns or relationships.
This is not possible in a family business (I question whether it's
possible in any business). In a family business, a sound decision
takes into consideration personal issues and business issues (see
table).
Paying attention to both family and business concerns is not easy.
Family rules and norms about what to talk about and what to keep quiet
may limit discussion of important issues. As you begin to discuss
family and business concerns you may need to use a non-family member
to help you sort through the questions that come up. But, families
tend to be closed groups – it's in their nature. This can affect
the family's willingness to call on outside resources for help. If
you're thinking, "Well, we can do it ourselves," or "We
don't need any outside help," remember that one of the advantages
an outsider has is not being caught up in your family's rules and
norms. They can ask the "dumb" questions which will trigger,
in your own mind, a solution to the problem that had been stuck or
hidden.
To make the most of your family business, it is vital to create and
use a diverse network of people resources for both your business and
family concerns. Bring all family members and their resources in the
business so you don't just use the resources of the founder or first
generation. This can be hard when the resources that the younger generation
is bringing in are new or unfamiliar. An example is the use of computers
and computer programs for bookkeeping or keeping records on the health
of the herd.
There are many things you can do to prepare yourself to make decisions.
The first thing is to talk about the importance of being honest instead
of saying what people want to hear. When it's your operation and you
are the ones making the decisions, you need to have people be honest
about their anxieties and questions. Everyone involved in the decision
should be encouraged to speak up about what they perceive as the pluses
and minuses of this decision and their willingness to take collective
responsibility.
Collective responsibility means that everyone agrees to be responsible
for the decisions that are made. This brings with it a tremendous
amount of individual responsibility and comes in handy as a philosophy
when there is dissension within the family. At times, family members
who don't get along pay less attention to decisions made that affect
someone else's work area. They accept decisions that they are not
comfortable with because they don't see it as their decision. Having
collective responsibility says everyone who is involved in the operation
is responsible for the decision. It's a very powerful tool for encouraging
people to speak up.
Another part of decision making to consider is the relationship between
trust and risk. Trust involves risk. Part of risk is supporting someone's
efforts to take on a challenge. When you trust someone you accept
the risk that some things will be out of your hands. There may be
times when you feel uncomfortable because a decision has been made
but someone else is responsible for doing the job. The risk piece
of this process is letting go of the anxiety and saying, "I trust
you. We made this decision. It's your area to implement. I trust you
to do it and to do the best that you can." This process does
not imply taking unnecessary risks my making a decision with which
you are not comfortable. The focus should be on trusting the person
to do his or her best once the decision has been made.
When decisions are made, pay attention to both family and business
concerns. It's very important to consider the family reasons and the
family dynamics that are influencing the business decision. Often
in family business, decisions are made ignoring the family background
that influences the decision. Sometimes it's hard to separate the
two, so calling in an outsider may help. I have never seen a business
decision made in a family business that did not have a family component
to it. Sometimes it's 90 percent family concerns and 10 percent business
concerns and sometimes it's the other way around. For example, consider
a family that owned a large parcel of land that was split up, with
parts of it sold to different farms over time. Now the family wants
to buy the land back to recreate the family homestead. If you talk
about it in terms of business decisions you can get into all kinds
of convoluted justifications for why you want to buy the land. Acknowledging
that it is the family homestead and that is why the family wants to
buy it back frees people up from trying to justify something that
no one really wants to talk about. A decision can be made based on
the impact of the decision on the business and the family. Can the
business support this purchase? Is it going to hurt the operation?
Will it help the operation? Are we going to feel good about it?
Decision making involves responsibility as well as opportunity and
can be affected by an individual's family and business roles. To successfully
make decisions the responsibility that comes along with all of the
opportunities needs to be emphasized. Accepting responsibility for
business decisions can be a difficult area for board members who are
not actively involved in business operations but participate in decision
making. They can have a hard time dealing with the conflicts between
perceived family and business responsibilities. Without a job description
– especially one that spells out board responsibilities –
all a family member has to rely on are family responsibilities, and
that's only half the picture. I strongly advocate that all family
members who are involved in decision making have job descriptions
that cover their business responsibilities. This makes clear what
their obligations are to the business, and what the boundaries are
around the opportunities that can be pursued.
Develop
opportunities
Developing specific
educational programs for family members coming into the business is
especially important to ensure that knowledge is transferred visibly
rather than assumed that it will be learned through osmosis. The next
generation family member may have worked on the farm during the summer
or helped out in one area, which is a good start, but this does not
provide an understanding of the total operation.
Educational programs that all employees can participate in are a good
enticement for attracting the best people to your operation. Including
opportunities for education as a part of the job says that you care
not only about what the employee can do now, but also about what he
or she will be able to do in the future. This might not work for every
employee, but for your key employees it can be very important to say
we are going to help you further your education.
Education for career advancement may involve taking time off from
the farm. One issue that often comes up for next generation family
members is the dilemma of having gone right on to the farm or ranch
after high school. Questions such as "Can I do anything else?
Am I just here because I'm a family member? Do I really have skills
that are transferable?" pop up after a few years.
It is often recommended that next generation family members work somewhere
else for two years prior to entering the family business. There are
a number of reasons for this. One is to gain a sense of independence
and a sense of confidence in one's own skills. Another is to change
the relationship between parent and child to an adult-adult relationship.
Education for career advancement and support for pursuing educational
opportunities away from the farm are very important to the development
of the next generation of managers.
One of the most difficult family business issues concerns retirement
and succession planning. Who will be the next leader? Very often retirement
means an end to something and it may be difficult to talk about what's
next. Here is this person who may have built the operation or who
has worked on it all of his or her life, and all of a sudden he's
talking about retirement.
Retirement is such a loaded issue to deal with that it can take attention
away from other concerns that need to be addressed. Questions such
as "what are you going to do when you stop going out to the dairy
at four in the morning or when you stop running the tractor in the
fields?" place attention on what a person will do after he or
she is finished with current activities. It does not imply an end
to one's active life. Rather it indicates a movement from one life
stage to another.
It is very healthy to think about what's next. What's next can be
teaching, working in the community or working with other farmers who
are struggling to get started. There is a wealth of knowledge, skill
and wisdom in people about to retire that could be passed on. We don't
tap into this resource very well. One program called SCORE –
the Service Corporation of Retired Executives – makes connections
between retired executives and other organizations where there is
a need for part time help in areas such as accounting, production
processes or marketing. You can do the exact same thing in terms of
a farming operation. Think about what's next
The areas I have discussed above are those that I encourage all family
business members to pay attention to. Focusing on the issues in each
area will enable you to ground your business in a solid framework
of ideas (vision statement), opportunities (educational programs)
and structures (job descriptions). This will provide you with a strong
base for handling the daily ups and downs that are bound to be a part
of your own family business.
Amy Lyman is a family business specialist and was formerly lecturer
in Applied Behavioral Sciences, University of California-Davis. She
is presently a Family Business Consultant with the The Great Place
to Work Institute.
