Create an effective conversation on farm transition
Change is difficult, whether it is a change in business or transitioning the business from one generation to the next. Develop a plan and effectively communicate between parties to avoid a failed transition.
Transition talks can be dreadful and pit parties against each other in an effort to find a long-term plan for the farm, but with the right approach, these talks can have an entirely different successful outcome.
“Poor planning will lead to a failed transition,” Liz Griffith said. “It’s time to start those transition talks, crack the door open and start talking, meeting with family and deciding what you want to happen.”
Griffith, a family farm business consultant with Liz Griffith Family Farm Consulting, presented “Can we talk? Effectively start a conversation about change and transition,” during the Vita Plus Midwest Dairy Conference June 13.
Consider this scenario: The older generation has been on the farm since they were a young child, and the time has come to discuss a transition from actively working to stepping back toward retirement. There may be multiple children or non-family employees whose livelihood will be altered by this change, and others who are not directly involved on the farm who may have stakes in the outcome.
“As farmers, this is the business we built with blood, sweat and tears,” Griffith said. “Thinking about retirement is really scary. Often, our biggest obstacle is the fear of losing the history and legacy that’s been created. Because of that fear, we avoid the talks.”
But a transition plan should be more than when retirement nears. It needs to be in place in the event of an unexpected death, divorce or any other reason that would drastically shift farm ownership.
The first step in creating an effective conversation about farm transition is to ask for a small yes.
“Essentially, the younger generation is asking the senior generation for permission to talk about transition planning,” Griffith said. “This is a matter of sharing your thoughts and really listening. Listen to hear, not listen to answer.”
Then, consider who all needs to be present for a family meeting, including children – both those working on and off the farm – and spouses. Set expectations with an initial meeting that includes an agenda for the day, a timeline of when decisions should be made and someone acting as recording secretary.
Griffith recommended routine meetings should occur at least once a quarter, preferably once a month.
“The work takes a long time, but you’re talking about a path, a roadmap for the future of this business,” she said.
What conversations are had at these meetings?
Before diving into the meat and potatoes of transition planning, the conversation should begin with stating the family values. This sets the tone for what the plan may develop into and how individuals’ values align with the family’s and what the intended farm culture is.
“If you’re all working around incompatible values, that’s a big messy hot dish,” Griffith said. “Share the values with people in that room and on the farm, then live by those values. They’ll help you make decisions, like hiring, firing and rewarding employees.”
Griffith suggested reviewing the family values every so often and reaffirming them. If they need to be modified to fit the needs of the group, so be it. Having a firm grasp on the values will allow for an easier creation of the farm’s vision.
“Everything you think, say and do needs to be intentional and aligned with your purpose, values and goals,” Griffith said. “Then your business will be successful.”
Also evaluate who wants to be a part of the farm business moving forward.
Not everyone in those meetings will want in or deserves to be in. The tableside conversations are a way to vet skill sets, areas of interest and willingness to learn from all parties. Consider questions such as, “What do the responsibilities look like?” and “What are the leadership skills they need?”
Griffith suggested families discuss “GWC” when filling a role. Does the individual being considered for a position get it by understanding the responsibilities of the role? Do they want it? And do they have the capacity to do it in terms of time, knowledge and mental stability?
Too many times Griffith has seen a younger family member move into a managing role on the farm, but the individual is not a fit for the position.
“That’s where there’s failure,” Griffith said. “If you’re talking about roles that nobody has the background in, but somebody wants it and they have the capacity to learn, the time and desire, they’ll get it.”
This concept could also be accomplished by ensuring all who want to play a part in the farm’s future has an opportunity to learn elsewhere, whether that is going to college or working on another farm before returning to the family business.
“I know that’s hard and difficult with the current labor market, but it’s pertinent to their success,” Griffith said. “As the farm owner, those who leave and come back bring you so much value, and there’s not a price tag on that.”
Other guidelines that should be established in conversations on transition include protocols surrounding family governance, including how decisions are made and who makes those decisions. Families should also develop compensation policies for when raises are offered, buy-in and ownership, as well as who can join the family business and under what conditions. Likewise, how someone may exit the business.
Griffith suggested these conversations occur once a month for a year, at minimum.
After those conversations are had and a tentative plan is established, then it is time to bring in an attorney and make the transition legally binding.
“You’re writing the roadmap; you’re writing the rules,” Griffith said. “Keep an eye on the prize, which is a successful transition.”
Click here to download Griffith’s PowerPoint presentation from the Vita Plus Midwest Dairy Conference.