This year I'm relaunching occasional Q+A online discussions with several farm business experts, including Lance Woodbury, a monthly columnist for both DTN and The Progressive Farmer magazine. He's a professional family business adviser based in Garden City, Kan. Lance is a trained mediator who can deal with the "soft" issues of closely-held businesses that, if unresolved, can hinder workplace and personal relationships. Actually, CPAs and attorneys tell me the financial side of farming is the easy part--it's the personal dynamics of a family that can undermine sound businesses. So here's our debut discussion on training a successor, but if you're interested a detailed presentation on succession and family business transitions, please join us for a free one-hour webinar Jan. 9 by registering at https://dtn.webex.com/…
Taylor, DTN: Many farm families are realizing that just because an heir has the right DNA, doesn’t mean that they have right to be a CEO or manager in a family business. In other words, successors must earn their job, not feel entitled to it. One father I know said he works with family members and other investors who hold him to a higher standard for accountability and accounting. “I want my successor not just to know what I know, but to be a better manager than I was."
Based on successful transitions, what kinds of requirements or preparation are important before a would-be successor comes back into the family business?
Woodbury: Marcia, if there was a “dream list” of preparation it would be the following: 1) Experience in a business much larger than, and even outside of, a production agriculture business, for example, one that has several hundred employees or multi-site locations. The formality, culture, business model, strategy and issues give one great exposure to how things might be done differently in the family business. 2) Experience being supervised by at least two different people, and supervising others to whom you are not related. Understanding the difference between a good boss and a bad boss is one of the greatest development tools in becoming a leader, and the experience of leading others--keeping them busy, focused and performing--is extremely useful when one returns to the family business; 3) Experience in a role in which negotiations take place, which can help the returning family member “hit the ground running” with vendors and advisers, and; 4) Profit and Loss responsibility so that the returning member has a solid grasp of financial statements, the relationships between the statements and an understanding of accrual-based financial performance.
Taylor, DTN: What is your feeling about hiring mentors or executive coaches to fill the gaps in a young manager’s skill set? Where do small business owners find them?
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Woodbury: The use of mentors or coaches can be very valuable. If a son or daughter is returning, a non-family coach or mentor may communicate the same things as Mom or Dad, but because they are coming from outside the business, the next generation tends to hear it a bit differently. At times an outsider can also create a greater sense of accountability to change or improvement by the younger generation.
The key to a successful mentoring relationship is that it be driven by the young manager. If Dad “hires” a coach for his son, Son’s psychological ownership of the coaching process is diminished and so are the opportunities for growth and development. It’s Dad’s plan, not Son’s, and that is not the best driver of improvement.
With technology and the cost of travel, finding a coach or mentor is not as difficult as it once was. However, I would suggest first looking to other local business owners. Who is someone in the local community that you respect for how they have built their business? If you don’t find anyone there, look to the industry: Whom do you look up to in row crop or animal agriculture? You likely know of people that would give you good advice and who could teach (however informally) some valuable lessons. A key is to get some type of structure or rhythm to the interaction: monthly meetings, quarterly breakfasts, etc. so that a consistent feedback loop is established.
Taylor, DTN: Lance, I'd agree that it's good to prospect outside of agriculture and even outside your hometown for a coach. One family I know hired an experienced CEO from Denver who specialized in turning around troubled businesses. They figured he could teach them why other businesses failed and, unlike a local banker or vendor, he'd have no conflicts of interest if they really leveled with him about their own weaknesses.
If anyone in the audience wants to weigh in, or wants to pose questions for future columns on family dynamics in business and succession, please post here or email Marcia.email@example.com or firstname.lastname@example.org
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