A farm had been losing money for years, and only its rising land values kept the bank complacent. The wife, Ida, laid down the law that either the farm started making money or it was to be sold, even if she had to file for divorce. She loved her husband, Jack, but she didn’t want to spend her retirement years penniless because her husband had an addiction to machinery and wouldn’t listen to their vet.
The problem? Jack felt that he knew more than the experts. He was a know-it-all, yet knew very little.
There are men you can’t tell what to do. However, you can help them better organize their thoughts and hold them accountable for doing what they said they’d do.
We had a meeting with the parents and their three offspring who were involved in the farm. We also included their vet, nutritionist and agronomist.
What I did was challenge the family to break down the business into different components and then identify the most important things within those components that were critical to profit. Then I challenged the family to increase profit in each component by 20 percent.
The format of the meeting was for the family to brainstorm themselves what they wanted to change. The nutritionist, agronomist and vet were there as information resources.
My focus as meeting facilitator was to get Jack talking and for him to volunteer the ideas, not to tell him what to do. If Jack thought they were his ideas and he was in control of the process, then these ideas would be adopted.
The vet was skeptical of the process going into the meeting – but within an hour was completely floored. Jack started to volunteer suggestions based on advice the vet had recommended years before but that Jack had dismissed.
Yet when pushed in a positive format to improve farm profit by 10 percent, he became in favor of the ideas – because they were his.
The kids contributed to the ideas, and within three hours, we had 10-plus realistic improvements to the farm operation that should have improved profit by at least 20 percent without costing more than $10,000. It was as simple as picking up dollars off the floor.
The real challenge was implementation. I knew that as soon as I left the operation everyone would forget what was said and it would be business as usual. For this reason, I got the family to sign a one-page family contract which:
1.Identified the dire nature of the situation and the need for change
2.Listed the 13 major points agreed upon and roughly how much money would be saved in 2014
3.Who was responsible for their implementation and by when
4.An accountability agreement wherein each person agreed to pay $5 for the first month each item didn’t get done and $50 each month thereafter
5.An agreement to meet monthly at a set time to review implementation for the next year
In the month following, I knew that half those tasks wouldn’t have gotten done. The farm got busy with day-to-day challenges like planting corn and taking off the haylage.
But then I sat down with them and helped them figure out how much potential profit they had lost because they hadn’t gotten those tasks done. It was more than $20,000, and they quickly realized that was more than they had paid themselves that month.
Little things like testing for ketosis or changing the heifers’ feed ration add up to big savings to the farm’s bottom line. Having an outsider hold the family accountable made the family aware of the importance of follow-through, and they got things done the next month.
A third party who could hold family members accountable also eliminated internal power struggles and disappointments when other family members let the team down.
The bigger thing was the introduction of metrics (measureable facts/numbers). What we did in the exercise was identify the critical things that determine farm profitability. We measured the things that influenced farm success, not the things that resulted in farm success.
For instance, we measured percent of heifers pregnant at 14 months and not the number of heifers calving. From these metrics, we then created a dashboard from which we could monitor the farm’s success and monitored these numbers as part of our monthly meeting.
By me coming back, month after month, to ask, “Where are you at with this metric?” it got the family focused on the forest, not the trees. I forced them to put dollar bills into a jar for each metric that they didn’t achieve on target and fined them in proportion to the potential profit they were missing.
For them, having to dig change out of their pocket made them cognizant that they were losing money as a result of their lack of action. It changed the culture of the family business from “fighting fires” to focusing on getting the critical things done right and on time.
With the family measuring themselves against self-set production targets, they became keen to make changes in order to achieve these targets instead of being opposed to change. They started actively listening to the advisers instead of distrusting their advice. The reason why? Numbers don’t lie.
So what is the take-away message for any young farmer? Instead of telling a dad what to do, get him to have an internal process that changes how decisions are made. Get the farm family to identify their top 10 weaknesses that affect profitability and then get the family to start measuring the factors that measure success.
Then start using external resources for information (i.e., your vet) to help the family solve these issues. By the farm recognizing how much money they could make if they hit these goals (gap analysis), they’ll be motivated to take a second look at solutions they previously dismissed as too costly.
Most importantly, change your culture of accountability. Often family patriarchs and family members don’t get things done they say they’d do, and this costs the farm bundles of money. Instead of nagging, giving the silent treatment or having power struggles, get an outsider to hold each family member equally accountable at a specific time each month.
There will be things you forget to do as well, and it’s only through a third-party holding you accountable that you are going to change your habits.
Instead of “banging your head against the wall,” find a door. Focus on changing the decision culture of your farm, rather than complaining about bad decisions. PD
Mark Andrew Junkin improves how farm families make decisions together in the years prior to farm succession. Get his book, Farming with Family: Ain’t Always Easy! at his website or call (800) 474-2057.
Mark Andrew Junkin
Management Consultant
