Minding Ag's Business

Don't Keep Partners in the Dark

Heirs can question their commitment if they are kept in the dark about plans for the business.

In our on-going Q+A on family business issues, I ask DTN's Farm Family Business Adviser, Lance Woodbury, to elaborate on the human faults and foibles that cause the downfall of many multi-generational farm operations. Woodbury, a founding partner of Ag Progress in Garden City, Kansas, is a trained mediator and counsels small and family-owned business on succession and strategic planning. This installment examines the downside of keeping business plans a secret from your partners and potential successors. To read more, subscribers can see his current column in Recent Features or on the Farm Business page.

 Taylor, DTN: Lance, a few weeks ago I attended a Farm Credit System workshop on succession planning and was shocked to hear that most of the 25- 35-year-olds in the room had no clue how their parents or grandparents intended to integrate them into a long-term plan for the business. It was as if they were putting their careers on hold, sometimes indefinitely.

In your column about keeping family members “in the dark” on key issues, you mention silence around the finances, reticence to define the future and avoidance of conflict. What are some other practices that create problems in the family business?
 

Woodbury, Ag Progress: Marcia, I commonly see a push for equality, dodging individual performance issues, and accommodating the badly-behaving family member as practices that harm the family business.

DRIVING TOWARDS EQUALITY

Parents often feel obligated to treat their children the same. After all, we tell them, and ourselves, we love them all equally, and that love usually translates into offering the same chances, opportunities and benefits to each child. They are part of our tribe because they were born into it, so it feels somehow wrong to give more to one than to another, or to focus attention or gifts unequally on members of the next generation.
However, our children are different, and our emotional, relational, financial and even business connections to them are – and should be – distinctive. The key is getting comfortable with the unique relationship you might have with each of your heirs, and explaining to yourself, and perhaps to them, why that relationship looks the way it does. This often is characterized as “fair is not necessarily equal.”


DODGING PERFORMANCE MANAGEMENT

“Performance management” is a technical phrase for how effective a company is at managing talent, and how good someone is in their job. In too many closely held companies, family members are given a pass for poor performance. This is often implied in the question, “Can a family member be fired?”


Parents have often worked hard to keep the business in the family, so the idea of a family member leaving the organization can be scary. But if the family member isn’t performing at the level they should be, your company will suffer. Your culture, morale, vendor relationships and even your reputation in the community all take a hit when you don’t address family member performance issues.

CATERING TO THE WHINER

“The squeaky wheel gets the grease” is one of many phrases to describe how attention is given to one who complains or demands attention. Again, we see that the fear of losing or alienating a family member can cause parents or siblings to continue meeting the demands of this person, and the whole family is caught in a system of reaction.

Taylor, DTN: Lance, so what's the solution?


Woodbury, Ag Progress: Marcia, while each problem has some unique characteristics, one of the common issues in all three scenarios mentioned here is the unwillingness to have a difficult conversation with a family member. Whether you’re attempting to recognize the family members who have invested more in the business, deal with an underperforming relative, or say “enough!” to the malcontent, you owe it to the family and business system to have the honest discussion. It won’t get better until you do.

EDITOR'S NOTE: Join Lance at DTN University Dec. 6 in Chicago. Details are at www.dtnagsummit.com


For alerts on DTN farm business coverage, follow me on Twitter@MarciaZTaylor


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