Policies - Oh Joy!Let’s continue down the path of developing and fine-tuning your family farm management system – for clarity, consistency and hopefully improved relationships and financial performance. Just as written job descriptions and areas of responsibility and accountability are essential for providing clarity and expectations for team members, there are other areas in your family farm business where clarity is also essential -- Clearly defined and communicated policies and procedures. |
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Job descriptions serve many functions and if this is new information for you…great! If you’ve heard it before and never really implemented anything…well, shame on you. Just kidding. Seriously, this is all about continuous improvement. So, back to job descriptions. In our practice, the unofficial statistics reveal that less than half of our most modern agricultural producers have adopted this as part of their management practices. How can this be? After working with many family farm clients in this area we learned that a common roadblock was that they did not completely understand the need for job descriptions or how to go about implementing the idea. Secondarily, we have also heard feedback that formalized job descriptions were more for non-family business employees and staff. Let’s examine further…shall we? Job descriptions help in daily operations as well as succession planning in a few key ways.
So, the need for job descriptions for your family farm have been clearly stated. Now what? A seemingly difficult, but fairly simple task is to begin by documenting the various tasks and decision-making areas of your family business. There are now two key tasks to perform and listed in the order of importance below…
Oftentimes, the least qualified person on the team is doing something they shouldn’t be, or is tasked with something that they really don’t have the skills to perform. This happens for many different reasons. By determining the qualifications and skills needed for the task ahead of time, it becomes less personal and more objective to assess who should perform what role in your family farm business. Regardless of a transition plan or not, this exercise might help rearrange your team members to perform different roles that they are more qualified to perform. You and your team might become more effective and happier. This exercise also helps show where gaps may exist. Oftentimes, no one is qualified to perform a certain task or area of decision making. So, it needs to be outsourced, filled internally or someone needs to get the training necessary to fill that role. As mentioned above, when looking toward the future and the “stepping aside” by senior management and the “stepping up” by a successor generation, presumably there are differences between the decision-making skills and areas of responsibility between the two generations, with the senior generation having much more responsibility and decision-making authority, along with the associated skills to do so. The gap between the roles each performs today and what you have determined needs to be performed in the future becomes your management transition plan. For example, Uncle Joe and Dad make any land purchase decisions. When Dad and Uncle Joe retire in 10 years, Billy and Susie are going to need to make those decisions. What skills do Dad and Uncle Joe possess today that enable them to make good land purchase decisions (presumably) that Billy and Susie will need to learn to make good decisions in the future? How are they going to learn them? Do they want to learn them? If not, who can they get to fill that role in the future? Does that make sense? Now, carry that line of thinking to all the roles and decision-making areas of the business. It’s just a matter of taking the time to determine the roles, gaps and timelines for gaining the necessary skills for continued success of your family business. To best accomplish this, honest self-assessments, performance reviews, natural strengths and weaknesses and a system for helping flush this all out builds the basis for continuity in operations and accomplishes a formidable task of any succession planning. As you might imagine, we have some various forms and detailed exercise to help you with this specific task. If you’d like a copy, please email me and we can get out to you right away. Until next time,
How Decisions Get Made and By Who Now is a good time to move into another phase of your management system that explores the concept of how your family business is organized…how decisions get made and by whom? There are multiple reasons why this is becoming increasingly more important in today’s modern agriculture. A bigger and more diversified operation with multiple entities is commonplace in today’s agricultural world. This is simply a matter of survival which requires growth to remain competitive. Certainly growth can come in many forms, but suffice it to say that the capital intensity and high-tech nature of modern agriculture demands more and more skills than in years past. As farms grow, more partners and owners work together. This increased complexity requires a more defined organizational structure.
Developing a process for improving your business planning including personal development plans for your team, standard operating procedures, setting policies and collecting, analyzing and responding to ever increasing record-keeping systems are a few additional areas to explore that will help further systematize your business in order to facilitate a management transition for your family business. Once management is transitioned, ownership transition is within reach. If you recall, the most successful transitions start with transferring responsibility, then management and eventually, ownership. We’ll begin with a short segment for today and continue with this next phase of discussions in subsequent posts. Transferring Responsibility - Delegation To keep things simple, there are only a few questions that must be answered:
It has already been established that today’s agriculture is too complex for one person to be technically skilled to handle all areas of the business. At the same time, making everyone responsible for everything is a fool’s theory. So, we must specialize and divide areas of responsibility. A common client question reasonably follows: “How do we structure things and keep everyone happy?” Well that’s the $64,000 question!
Next time -- a discussion about the need for job descriptions, performance reviews, guidelines for future leadership and how to come up with a plan to transition management.
Maybe your family business has been able to beat the odds and there are no hidden agendas, alligators in the closet, jealousies or misunderstandings. Heh. Your investment in improving these areas of your business is MORE IMPORTANT than saving ¼ percent on your line of credit, or which combine gets overhauled this winter. Without a professional communications platform for your family farm, business stagnation, paralysis and breakup are often the ultimate outcome. A few areas you might consider addressing in your family farm business are guidelines for meetings and personal accountability standards for you and your teammates. Discussing and developing the reasons and types of meetings you will hold can help end the sometimes useless meetings that can creep into your business. The practice of Personal Accountability has several components as its foundation. One key component is the notion that each individual person on your team’s personal behavior adheres to the “It is My Mess. I Own It. It is Up to Me to Change It.” mindset. When interacting with others this involves asking questions in a different way. For example, asking “How” and “What” questions as compared to asking “Who”, “Why” and “When” questions.
“When” questions suggest someone else might be responsible and that all you can do it wait for something better…a form of procrastination. “When is management going to do this?” or “When will Billy do what he promised?”, etc. This is not good. “Who” questions suggest that someone else is to blame. It’s the Blame Game. “Who made that decision?”. “Who is going to fix this?”, etc. This is not good. “How” questions are a search for a solution. “How can we make better decisions?”. “How can I help you?”. “How are we going to fix this?”. This is good. “What” questions seek answers. “What can be done?”. “What is the lesson to learn from this mistake?” “What is the solution?”. This is good. Personal Accountability is all about being ready to answer the questions: “How can you improve or change this situation?” and “What are you willing or able to do?” By focusing on the situation, issue, opportunity or problem…and NOT other people… creativity, productivity and more harmonious relationships can develop. An article about meetings? SHOOT. ME. NOW.
Of the many reasons why meetings are so energy-sucking is because the meetings have limited structure, there are not clearly defined areas of responsibility or standard practices for performing routine activities. Not every decision to be made requires a committee, nor attended by everyone in the business. To become more effective with your family business’s meeting structure, answering the who, what, when, why and where can be very simple to execute: • How many and what types of meetings are applicable to your family farm? • Who should attend and participate in the various meetings? • What items are appropriate for any given meeting? • When and where will meetings take place? • Why are we having this meeting and what are the expected outcomes?
Agenda setting is a key to making sure that meetings remain focused on the appropriate topics for those attending. Before moving along, it is prudent to talk about who sets the agenda. If you have adopted the practice of defining roles and responsibilities inside your business, this is another to add to someone’s job description. So, let’s assume that the agendas for the various types of meetings in your business will be the responsibility of a designated person…a meeting planner. The meeting planner has the task of recognizing that inside almost every business there are employees, managers and owners. Agenda items need to be relevant to those attending in their various capacities (staff, manager, owner). Staff meetings are generally intended to discuss tactics and day-to-day business activities. These will vary in frequency. On the family farm, there is often a need for short, quick daily “stand-up” meetings to discuss immediate needs and planning. Daily “Stand-Up” meetings are just that…standing. Don’t sit down. The goal is to make it quick, efficient and productive. Weekly meetings may be more appropriate during slower times and can be used for outlining goals for the week and assigning activities. Ad-hoc meetings can be called for training and internal announcement type information. Management meetings are intended to explore bigger picture issues like planning, defining job responsibilities, coordination of resources, deciding on priorities, determining how to gather and analyze data and employee reviews and training programs. These meetings can be weekly, monthly, quarterly and annually. It depends on the agenda and the desired outcome of the meeting. Ownership and board meetings should be conducted at least annually and involve key stakeholders, owners and spouses. Many times, there is a need for these to take place quarterly and monthly, especially as your family business becomes more complex. Whether they are involved in day-to-day activities or not, spouses are a big part of ownership meetings for family businesses. They act as silent partner in the business by virtue of being married to an owner. These meetings are appropriate for strategic planning issues, general policy setting for operations, dividend distribution and management compensation. There are several reasons for having a meeting. The expected outcomes from various agenda items fall into one of three categories: 1) Give information, 2) Get information, or 3) Develop options or make decisions. These need to be clear when agendas are shared with attendees. If attendees are not clear, some may be trying to make a decision while others are simply sharing information. Does that make sense? Some best practices for helping ensure productive meetings include trying to make sure that attendees have balanced participation. Locate the meeting where business can be conducted without interruption, including cell phone usage during the meeting! Whoops, I let that pet-peeve out of the box. Toddlers should not be present and the TV should be turned off. Holding meetings at the kitchen table is not the best practice and is conducive to interruptions and perceptions of low seriousness. Location is important. Rotating locations can add some variety and helps level the “home turf” advantages that can subconsciously creep into the situation. Schedule meetings when they are appropriate. Don’t schedule a 4 hour long-term planning session during the middle of harvest. Keeping meeting notes and using them as a basis for follow-up helps eliminate those decisions that are sometimes made where no one ever gets busy with the specific action items. Meeting notes also help create an environment of personal accountability. If everyone knows that there will be follow-up, odds increase that the work will actually get performed. You may have experienced it – everyone is excited about an idea, but it never gets implemented because the “who”, “what” and “when” of the idea were never decided upon. Several months later, the same discussion often takes place again…a complete waste of time. General Rules for Business Meetings and Guidelines for Personal Accountability can provide serious productivity and accomplishment to various meetings in your business. Coming to an agreement on these things before holding meetings is a best practice and something we can explore in the near future.
When the family farm was owned by one family member, communication was generally “one-way” and therefore, fairly easy. As more successors and/or partners join, or contemplate joining, the family farm business, communication and behaviors can get more complicated. This Code of Conduct and the process of developing it helps increase the appreciation and recognition for everyone’s individuality. It helps ensure that behaviors are something mutually agreed upon rather than imposed by senior leadership. It provides a guideline for more constructive and productive interactions. As with most things in life and business…things change. Therefore, these things are not written in stone and can be edited as time marches on. If you have been with us for a while, you know that this article is only about one component of your family farm’s communication platform, which in turn is an important part of creating a professional management system for your family business
A Communications Pledge, or Code of Conduct, is also a reflection of your values in action. Your behaviors reflect what you value. By working with one another on this project, it offers team members a chance to develop a written collection of the rules, principles and expectations about behavior and relationships that they consider significant and fundamental to the successful operation of your family farm business. Also known as a Code of Conduct, it can spell out these standards and help further systematize your professional management system. How this is finally developed is up to you…it’s your family business. To help get you started on this exercise,send me an email requesting a sample Code of Conduct, a Communication Pledge or both. Outside Business Activities -- Another component to consider is your team’s policy in regard to individual owners’ (or potential owners) outside business activities, outside investments or their possibilities. Ever thought about that? How is that handled? Ahhh…good question Grasshopper. For example, is it acceptable that a successor in a senior management position takes on a major commitment in a voluntary role with an industry association? Yes, no, maybe. If it takes time away and significantly impacts job performance and the business, maybe not. If the activity complements the business and leads to further education and networking opportunities and the business can handle the departure, then maybe it should be pursued. How about sharing in or simply disclosing outside investment opportunities? Full and open disclosure among business partners seems prudent. But, if you have never discussed it, how can everyone be on the same page? You can’t be, necessarily.
The most successful multi-generation family businesses share outside business activity and investments with one another. Oftentimes, they invest together. Is that mandatory? Of course not. So, why is it important and generally a good practice? How would you feel if your business partner invests in something, doesn’t share it with you, then makes a killing and now has millions and millions? Of course you would be happy for him…but there might also be a little bitterness. When big discrepancies in personal wealth develop between business partners, especially siblings and cousins, it can become more difficult to keep the team together. There is also the trust-building factor that is accompanied with the sharing of outside investment opportunities. Sharing helps create and foster the spirit of generosity, “team” and looking out for one another. These were some simple examples of outside business activities to be discussed and agreed upon. If you put your mind to it, I am certain you could come up with a dozen other areas. So give it a whirl. See what you and your family business team members come up in these two areas of your farm management system – A Code of Expected Behavior and an Outside Business Activity Guideline. While doing so, try to pay attention to the benefits of the actual process, as much as the final prepared documents. Because that is where the real value is derived…working together. Good luck!
Last week we began a series of discussions about a Deliberate Communication Platform for your family business. Namely...
"A prearranged and agreed upon way in which information, ideas, opinions and decisions are shared among the various stakeholders in your family business.” Again....and why did I start that discussion? |
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