Investing in the next generation

Just like any investment, the earlier you start the more it has time to grow and develop.

Originally published at dairyherd.com on 10/14/2021

You invest in your business; you invest in your retirement, and you invest in your connections with loved ones.

Have you considered investing in the future leadership of your farm?

John thought he had everything covered. He didn’t question his succession plan; he was fortunate to have two sons come back to the dairy.  Everyone worked well together, and it was just assumed it would easily be passed on.

Unfortunately, John passed away unexpectedly before his anticipated retirement date.  His sons were not prepared to fully “take over” the operation, nor did they agree on who would be in charge of what.

Arguments ensued.  Employees quit.  Big decisions were left unanswered.

John did not invest in the future leadership of his business and now, only one year in, it was faltering.

Is there a better way John could have prepared?
How can you avoid the failure of your succession plan?

The most critical piece is to invest in your future leaders early on.

Successors who are prepared have a higher chance of carrying on the family business.

In addition, it can also lead to:

  • Greater retention of high performers
  • A stronger culture
  • A team that is better prepared to thrive in uncertain conditions
  • Greater stability and resilience

The following are some steps to help you invest in the next great leaders of your farm:

1. Do you have a potential successor in mind?

If you're the owner, get real. Ask yourself, how long do I want to continue to run our business? What if something happens to me that takes me out of the business before I'm ready? Do I have a potential successor?  And, if so, have I groomed that successor?

2. Find out who's interested.

Someone from the younger generation — son, daughter, niece, nephew, grandchild, etc. — may have expressed interest in taking over from you, but you need a commitment. If you have more than one child, especially more than one who has worked in the business, have a frank discussion with all of them present about your wish to ease yourself out of the business.

3. Use your best judgment

No one knows their kids as a parent. does   Ask yourself if any of the family members who have expressed interest in succeeding you truly have what it takes to be a  business owner.  Take your blinders off and truly consider the following:

  • Do they love the business?
  •  Have they taken the opportunity to work off-farm to gain insightful experience? Are they capable of, and willing to, work long hours if need be?
  • Can they manage those critical relationships — customers, vendors, key employees — who make the business go?
  • Do you know their strengths and weaknesses?
  • Do THEY know their own strengths and weaknesses?
  • Do they have the right basic skills?
    • Experience in creating budgets, financial plans, and balance sheets
    • Ability to create and follow protocols
    • Desire and ability to manage people
    • Capacity to train others
    • Effective, communication skills
    • Potential to manage the cow and crop side of the business
  • Is your successor's immediate family supportive of the transition, which will require more time away from home and perhaps shifting responsibilities within the family?

Most importantly, choose the best person or persons suited for the job.  It’s not about making everybody happy or every person a leader, it’s about planning for the success of the business and their role in it.

 

Once you have selected a potential successor or team of successors, spend time with them

Explain the history, culture, and values.  Work together to make sure your values and vision align.

  • Prepare them by enrolling them in educational seminars, programs, and peer groups.
  • Define their roles and responsibilities.
  • Define how they will be held accountable.
  • Utilize job rotation to provide experience in all areas of the farm.
  • Provide them some leadership roles now to see how they progress.
  • Provide feedback.
  • Be a mentor and/or coach.
  • Be open and available for questions.
  • Work with them on communication skills. The how, when, and what to communicate. (This is key to a leadership role)

 

John’s family was able to reassess the situation and obtain help while they transitioned and prepared the new leaders.  There were many bumps in the road, but the commitment was there.  The sons agreed it would have been a smoother transition if they understood their roles and expectations going forward.

Investing in the future leadership of your farm entails

TIME, THOUGHT, and TRAINING

Just like any investment, the earlier you start the more it has time to grow and develop.

 

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