In 2012, and likely continuing into 2013, economic conditions for the dairy enterprise have been at best challenging. Coming on top of a disastrous year in 2009 and continuing in the new era of high feed prices, many dairies are in very weak financial positions. These businesses are often called “troubled dairies.”
In this article, I address not the cows or the dairy practices, but how the owners of these dairies might respond in their roles as leaders and supervisors of their workforce. The article focuses on dos and don’ts in five areas – strategy, leadership, supervision, trusted adviser relationships and employee motivation.
In each area, the “don’ts” are discussed first. Unfortunately, owners of “troubled dairies” tend, as human beings, to respond as described in the “don’ts” sections. Implementing behaviors suggested in the “do’s” section will likely be the most difficult undertaking these owners have ever faced!
Strategy
• Don’ts : Owners of “troubled dairies” are under great personal stress and are often viewing the changes occurring around them as a loss. Researchers have found that we as human beings have a predictable pattern for dealing with loss.
The first three stages in that pattern are shock and denial, anger and depression/detachment. It is easy, in these stages, to adopt an attitude that there is nothing I can do or that in time everything will be OK. Both of these attitudes contribute to doing nothing and hoping that everything will be OK.
• Do’s : It is highly unlikely that doing little or nothing will fix the problem. Instead, this is a time to do two things. First, be creative and think out of the box. Second, carefully consider all alternatives, potentially including drastic alternatives like selling assets, because additional missteps could prove very costly.
Leadership
• Don’ts : With the stress and loss will likely come a reduction in enthusiasm and potentially a tendency to become isolated. There may even be embarrassment from the situation the dairy business is in. This lack of energy and enthusiasm can be contagious and spread to the remainder of the workforce.
• Do’s : Think about the manager of a baseball team when the team is mired in a 10-game losing streak. Everyone is losing confidence; the manager must be the one that is encouraging and upbeat to keep each player focused on contributing to ending the losing streak.
Owners must be like the baseball manager. They must lead by example by being almost a cheerleader and by continually reinforcing in words and actions the mission and values of the dairy.
They must be optimistic and encouraging in their words and also in their actions. These actions must be positive and increase confidence that the future will be better.
Supervision
• Don’ts : Owners and others who are supervisors often have a tendency, because they are stressed and distracted, to become less proactive and even switch from being fair to “just being nice.” Unfortunately, this change is likely to result in employee frustration as unaddressed issues fester and, consequently, slippage in performance occurs.
• Do’s : In most cases, performance must improve for there to be any chance of economic recovery for the business. Improved performance is the responsibility of dairy supervisors. They must become more proactive – not less – in detecting both employee and process issues.
This is the time for “no defects” process performance. This requires that supervisors be very clear about behavior and performance expectations; provide the training, coaching and support required for excellent process execution; and provide large quantities of positive and redirection feedback.
Trusted adviser relationships
• Don’ts : One of the characteristics of the first three stages in the loss pattern – shock and denial, anger, depression and detachment – is that one’s decision-making capacity is diminished. For this reason, one must carefully consider the seemingly logical cost-cutting measure of reducing the dairies’ use of consultants.
In most “troubled dairy” situations, the lender is making demands, often ones that seem unreasonable to the owners. It is easy in this situation to avoid communicating with lenders as the conversations are difficult and strained. Do not be tempted by this logical direction.
• Do’s : Let’s start with lenders. As indicated above, the demands of the lender often appear harsh and even unreasonable to the owners of these dairies. These demands typically are the result of the lending institution’s policies and regulations; they are not a personal vendetta aimed at you.
Despite the difficulty and potential embarrassment involved in communicating with your lender, you must increase the level of communication. In most situations, your lender is trying to help you; lenders do not benefit from your troubles. You and your lender must work together to resolve the lending issues you are facing.
For other trusted advisers – consultants, confidants and mentors – it is crucial that you determine what you need from them, recognizing the potential for diminished decision-making capacity, and then hold them accountable to provide what you need.
If you are not using what they are providing, use it or reduce your use of that trusted adviser’s services. In determining your use of consultants and coaches, you must focus on those who will help you determine root causes and implement positive changes.
Employee motivation
• Don’ts : Whether or not you decide to tell your employees that you are in financial trouble, it is highly likely that they will know there is trouble. There are two things you should not do. First, do not try to hide the challenges from your employees.
They will know something is wrong, and what they imagine in the absence of information will likely be much worse than the true situation. Second, do not use the trouble as a threat as in: “If you don’t work harder, we will not survive.” Threats do not motivate people to excel and to be creative and motivated.
• Do’s : In football terms, it is time for the two-minute drill. You need to get everyone to come together as a team. Let them know that there are challenges and that we need everyone doing their best to succeed.
Make the situation a challenge that can be met by everyone working together and doing their best. You need to be encouraging, lead by example and accept only outstanding performance.
As can be seen above, this is a time when the required behaviors will likely be very different from those that come to you naturally. Owners must act thoughtfully, not instinctively, to provide the leadership, supervision, decision-making, coaching and cheerleading required in this difficult time. PD
Bob is also professor emeritus, Dyson School of Applied Economics and Management, Cornell University .
Bob Milligan
Senior Consultant
Dairy Strategies, LLC
