“Whether it’s in corporate America, private or even on the farm, you never know what is going to happen,” says Jerry Kozak. “Everyone needs a management transition plan.” Last December, Kozak sat down with Progressive Dairyman’s managing editor, Walt Cooley, and described his involvement in the National Milk Producers Federation (NMPF) as CEO; a position he held for 16 years. In the interview, Kozak mentioned the success he believed he had as he helped Jim Mulhern transition into the leadership role.

Kozak believes that a succession plan is key for any sort of business, including the dairy farm.

The resources and tips he used to implement and follow through in a smooth transition to retirement can be a guide for dairy producers looking to make similar changes on their farm. Whether a father on a small third-generation farm is looking to hand off the responsibilities to his son or a larger dairy is in the process of hiring a new manager, Kozak’s four simple steps can be applied to any operation to ensure an effective succession period.

Step 1: Making sure you are ready
“The number one factor for anyone considering retirement and having a succession plan is that you must be ready,” says Kozak.

There are two factors that come into play when a leader is not ready to retire. First of all, that person will have a difficult time creating the necessary succession plan due in part to their lingering commitment to the farm. Following that, their personal life will begin to suffer. Often times, many people who retire too soon repeatedly ask themselves the question, “Should I have retired?”

There comes a time when the obligation to the farm is to develop a succession plan and move forward with the decision to step down.

“We’ve had a longevity of trying to relate this to the farmer,” says Kozak. “I have friends who are in the farming business and see people well into their 80s who still want to farm.”

The happily retired businessman was a Washington Wizards season ticket holder during his time at NMPF. He often describes an analogy of Michael Jordan with the Wizards to better explain the concept of knowing when to step down.

He says Michael Jordan’s athletic career struggled as he crept between his first retirement from basketball and his return to an NBA championship.

“The greatest basketball player in the world retired and then was drawn back into the game – and where did he go? He went to the Wizards and that didn’t turn out,” says Kozak, with a chuckle.

Likewise, Kozak most similarly relates the concept of knowing when to step down to boxing legend Muhammad Ali. Arguably one of the best athletes in history, Ali chose to stay long after his peak-performance years and is now physically challenged.

The single-most important piece of running a farm, or managing a certain aspect of the farm, is to understand when it is your time.

Step 2: Prepare using available resources
After a person has decided it is in their best interest to step down from their current position, the next step in the process is to become educated on how to perform a successful transition into retirement and adequately train their successor.

In Kozak’s position, he spent hours reading hundreds of books and articles that thoroughly described the do’s and don’ts of implementing a succession plan. He was also able to take one of several courses that are offered all across the country.

One book, in particular, was Harvard Business School’s, “Succession: Are You Ready?” a resource that looks at different case histories of successful retirement planning.

The simplest way to discover these resources is to use the Internet and talk with others who have gone through the process themselves.

“The one advantage that we have in our lifetime now, that I didn’t have growing up, is the computer,” says Kozak. “Online you can get virtually anything you want. All you have to do is type in ‘succession plan’ and find all you need.”

Step 3: Sit down and develop a plan
Every farm operation is different, making it vitally important that a producer takes the time to sit down and develop a succession plan that best fits the farm’s needs.

Developing a plan can be more difficult on the farm level due to the number of people personally involved in the operation. Together, discuss the best method for transitioning and create a time frame.

The plan should include personal training and the opportunity to meet each employee the successor will be working with so that they understand everything there is to know about the operation.

“Retirement isn’t easy for farmers,” says Kozak. “If you don’t have a time frame and a plan to keep you on track, the succession becomes much more difficult for both the farmer and the person stepping in.”

For Kozak’s transition, a year-long time frame was established. This allowed for benchmarks to be implemented, and as six months approached, Mulhern assumed a number of responsibilities as incoming CEO.

A time frame and benchmarks were necessary for Kozak’s succession plan. He believes at the farm level it should not be any different.

Step 4: Discuss the decision with all employees
The final step, but just as necessary as the others, is to discuss with each and every employee the decision to retire.

On the farm, this can be the most difficult step, depending on who is taking over the position and who else is involved on the day-to-day operations. This is especially concerning if a large family farm has multiple children who are all looking to become more involved in the dairy.

“The key is really good communication,” says Kozak. “When it’s clear, some people may not like it, but there are no mysteries or surprises and everyone can move forward in an open environment.”

Life on a dairy farm can be hectic and many things don’t go as planned, but what dairy producers can control is the backup plan.

When a manager or highly regarded employee on the farm leaves, it can have a tremendous impact on everyone else involved, causing major disruptions, anxiety and turmoil. The importance of having a plan cannot be emphasized enough.

Dairy producers dedicate their entire lives to the success of the farm. However, Kozak explains that many lack the ability to plan and understand that at some point they will no longer be farming.

Producing a succession plan early on allows the dairyman to be more comfortable about retirement when that time comes along. Rest assured, there is no need to rush out of the business.

“Always remember,” says Kozak, “it would be far better not to retire than to retire when you’re not ready.” PD

Jennifer Janak is a 2014 Progressive Dairyman editorial intern.