Policies

The absolute joy of developing policies for your family farm business.

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.  

The objective is to provide written guidance for consistency in various areas of management and operations.  These guidance documents can generally be classified as “Policies”, which are more general in nature, “Standard Operating Procedures (SOPs), which tend to be more specific:

• Policies provide general guidelines by which day-to-day operational decisions are made, 

• Standard Operating Procedures (SOPs) are generally more specific and concentrate on day-to-day methods or approaches for performing specific tasks.

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Jim!  Why must you continually add more paperwork to this “management system”?  Hey…I’m sensing a little sarcasm there?  Ha!  Remember a few months back when we first talked about a management system for your family business?  No.  I do.  We defined a management system as “an organized approach to business to help ensure effective relationships, performance and long-term viability.”  Assuming that’s still the objective, let’s continue…

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Especially in a family business, developing the policy before the need arises can be especially helpful in various areas of your business.  A policy, when developed before the need and consistently applied, is generally more accepted by everyone involved as less personal and arbitrary.  A consistent application of pre-determined decision-making is more systematic.  A common understanding removes inconsistency for everyone – owners, senior management and employees.  Removing inconsistencies helps reduce or remove a list of problems that can otherwise arise amongst your team, such as anxiety about equal treatment.

So, by putting your policies and procedures IN WRITING, you help increase several benefits of policies:

• Agreement on key areas of your family business
  
• A valuable item for enhancing communication among all team members and other key stakeholders (partners, spouses, extended family, etc.)
  
• General improvement in operations and financial performance…assuming best practices are adopted as policies
  
• Improved job satisfaction, performance and teamwork
  

In our practice, we have experienced some of our clients adopt and implement policies that literally save them thousands of dollars with various strategic changes in policies and procedures.

Next week, we will begin by reviewing some common areas that generally benefit from policy documentation.