John was ready to start his succession plan. He was 63 and wanted to get the process done quickly. He had a plan. During our first meeting, we discussed history, core values, and culture. John's response? What does this have to do with transferring the farm to my sons?
Most family businesses do not successfully transition to the next generation. It is an unfortunate fact, and family farms are no exception. Why don't they make it all the way? There is often unmanaged conflict based on incompatible values and a fuzzy vision of where the farm is headed.
As we compare the older generation to the younger generation, we find differences in their core values. Taking the time to understand these differences; understanding the history, values, and culture of the farm is a crucial first step in succession planning.
Values create the farm culture, and each farm is unique. The founder of your farm had a set of values that built the business culture. Most likely, they never discussed these values. They just assumed everyone thought the same way.
The importance of discussing family values:
- We cannot assume everyone is on the same page with our personal values. Over time, each generation operates under a slightly different set of values from their own experiences and different sets of parents. Its important that each generation affirms or modifies values that will move the farm forward. Values are slow to change but they can change.
- New family members, such as in-laws, have not been immersed in your culture while growing up. They don't automatically adopt your values just by marrying into the family. If you want them to embrace the family culture, you need to bring them up to speed by having good discussions and sharing family history.
- Core values serve as a guideline for hiring, rewarding, and firing employees. By communicating your core values to employees (who may also be family members), you provide them with a framework on how their actions and work will be judged.
- Understanding the core values helps guide major decisions and also helps the family, owners, and employees understand what core principles made the farm great.
- Shared values are the ties that bind when the going gets tough.
Our values shape our thinking on work/life balance, management, control, transformation, careers, and compensation. Each generation interprets these differently, which can lead to conflict. Discussing the importance of our core values is not an everyday occurrence on the farm. But it is the crucial first step for a good succession plan.
In the beginning, John felt focusing on values was unimportant and a waste of time. However, he soon came around to understand that these conversations and changes were necessary to move forward with the help of his sons. As they continued to discuss their concerns and challenges, they agreed on an updated set of "Core Values". a result, their culture has improved, the amount of conflict has diminished, and they are on track for a successful transition to the next generation.