Management Blueprint For Family Farming

How do you keep the peace, have family love and harmony and run a demanding business with family members? How do you keep business and family relationships straight? Do business conflicts ruin family togetherness? Can family togetherness interfere in resolving important problems in farm and ranch management? Here are six essential elements for running a successful multi-family or multi-generation family farm or ranch.

1. Selection of compatible partners. Not all children or their spouses make good farming partners. If there are known problems such as dishonesty, laziness, selfishness, addiction, temper problems or rigid, inflexible thinking, then these partners will drain the enthusiasm and spirit of their other partners.

Some parents don't make good partners even if their intent to start the next generation is admirable. Typically, fathers who are rigid, controlling and perfectionists will have difficulty delegating meaningful responsibility and sharing management.

Adult children need to have opportunities to grow, be creative, make decisions and feel that their ideas can be of influence. When partnerships are based on mutual trust and respect, then the flow of ideas will be well received and the best ideas will emerge.

2. Goal clarity and long-term commitments. After an initial testing period of a year or two, the family should start to discuss and formalize a plan for eventual transfer of control and ownership of the farm or ranch. Estate planning and discussions about how retirement will be handled are key elements. These provide security for the next generation of farmers who are committing their lives to the family farm or ranch.

Insurance and other non-farm assets needs to be considered for off-farm heirs in the estate plan. The goal is protect the farm or ranch from significant debt and cash flow problems. Leaving land under joint ownership of farming and non-farming heirs poses thorny issues that may eventually cause rifts. Brother/brother partnerships need to plan for the day when they need to split. This needs to happen when they involve their own adult children in farming.

3. Growth for everyone. Family members need opportunities for meaningful responsibilities, creative work, participation in the decision-making process, accountability, and specialized work in which they receive recognition and respect. There should be enough work and responsibility to challenge everyone involved. Clear areas of delegated responsibility and/or individual ownership will allow executive skills to emerge.

Farm or ranch management needs to play to each individual’s strengths. The family business benefits by having motivated family members who make specialized contributions, assume a teamwork posture when it comes to the total operation and are good at coordination with each other.

4. Effective communication. Family members need to have confidence in bringing up problems, talking them through and arriving at joint, mutually satisfying solutions. Good habits of listening and respectful expression of opinion are essential for problem solving and negotiations. The partners need to be open to ideas based on their merit and engage in genuine give-and-take discussions.

Regular family business meetings are excellent for talking through goals, making plans, deciding compensation, ensuring equity in work, improving work coordination, scheduling time away, and other ticklish issues without threatening the general goodwill and harmony in the family. Also, day-to-day planning has to be consistent and respectful.

Open discussion will clarify goals, values and strategies regarding work and financial management. A focus on long-term planning will address the strengths and weaknesses of the operation, opportunities and threats to business viability and help the families be on top of needed changes.

5. Respectful social distance. Each family should enjoy minimal intrusion from other family members on issues of child-rearing, lifestyle, social commitments, friendships, and basic values apart from the business enterprise.

Each family unit needs its own sense of autonomy. It is no fun to be on a family farm when there are tensions or control issues between families. Daughters and sons-in-law should be accepted for whom they are and their needs and opinions taken into account. Families need courage to talk through sensitive issues.

6. A plan for retirement. Effective transitions from one generation to the next depend in large part on the parental willingness to retire. Letting go is easier if the parental lifestyle has included a variety of interests and activities that are enticing and rewarding.

Travel, vacations, second careers, volunteer activities, fun hobbies, community leadership, special interests, visiting children and grandchildren and having an active social life with friends make for great retirements. It happens when farmers and ranchers cultivate a lifestyle that has more in it than work.

Semi-retirement is a viable option for those parents who have had a democratic family business. Stepping aside from management and filling in when necessary is quite natural when there has already been a pattern of shared decision-making.

In a day when agriculture is so stressful and demanding, a positive system of family management is a key to managing stress, drawing out ideas and making good decisions. It also helps insure the main attraction of family farming and ranching - love and harmony as you work together toward joint goals.