Editor’s Note: The following is the first of a three-part series which discusses labor issues for the progressive dairy.

Dairy farming is evolving and changing, like every industry. Average milk production per cow across the United States has been rising steadily for years. Dairy farms have been decreasing in number and increasing in size for many years. These shifts have caused many dairy owners and managers to modify their focus from managing cows to managing the people who manage their cows. If you are not keeping up with the change, then you are falling behind.

But change just for change’s sake can lead to unpredictable and poor results. Careful and methodical assessment, analysis and planning are necessary not to keep up with, but surpass the pack.

Today’s dairy managers need to look at labor issues differently than their parents and grandparents did or differently than they did in previous years. Today’s larger farms require dairy farmers to effectively lead their management team and with their team develop and communicate their objectives and goals to their employees to translate this vision and strategy into manageable, measurable, workable protocols and plans.

Effectively selecting, training, communicating, motivating, promoting, disciplining and terminating employees all are critical issues which can send positive or negative messages to employees about your character, principles and attitude toward your business and employees.

Today’s challenge goes beyond outproducing your neighbor; it is a complex mix of understanding science, medicine, nutrition, agronomy, finance, futures and options, supply and inventory management and technology, which is all woven together by the team you put together and the employees you hire. Together, you can manage your cows to increase production, minimize costs and maximize profits.

Dairies often evolve through three phases marked by increasing labor demands and a relinquishment of power and control as they grow and progressively expand. The first phase is typically what many urbanites think of as the “family farm.” Labor is almost exclusively performed by the family, and the farm employs typically six or fewer outside people. Very little training is involved, rarely are there any protocols and the organizational structure is very top-down, autocratic, ‘this is the way things get done!’

Phase two is marked by an expansion of moderate size and is a key defining moment. The farm generally employs between 10 and 20 people and middle manager positions emerge. The owners must learn to delegate, relinquish power and trust others with his or her farm. Those farms emerging successfully from phase one develop standard operating procedures (SOPs), adequately train employees and look at the people running many of the day-to-day operations as assets rather than liabilities. Those farms caught between maintaining control and letting go struggle with labor issues and constantly have a hard time finding good hardworking people. Many of these are the failing family farms we hear about in the media today.

Phase three involves large farms generally employing 25 or more people and often starts outsourcing some of the work on the farm. Lawyers, accountants, business and financial advisers, veterinarians, environmental specialists and payroll companies (to name a few) potentially get more involved as team members in the business plan. These farms emphasize training, protocols, communication and teamwork to develop and execute a successful business plan.

The milking parlor generally operates around the clock. Besides land, the parlor and cows represent the two greatest fixed costs on a farm. Labor, behind feed costs, generally represents the second-highest expense as a percent of operating expenses on dairy farms and can range from 6.5 percent to 15.9 percent.

The labor force on large dairy farms consists predominantly of Hispanic employees. Most dairy owners and managers I am familiar with do not speak or read Spanish, and many employees speak and read very little English. This obviously can create huge communication and cultural barriers. Some employees are illegal immigrants working with counterfeit Social Security numbers and cards, driver’s licenses, alien registration or resident cards.

Many dairies pay employees a monthly salary and either provide on-site housing or offer a housing allowance to their employees. Benefits often include health insurance, paid vacation and meat.

Most dairy farms I am familiar with do not have written protocols or SOPs for their employees and training generally consists of working with current employees. Very little formal training, if any, exists in most operations.

In general, it is not difficult for a dairy to find labor, but it is sometimes difficult to find qualified labor. The dairy I am most familiar with has approximately five to seven people a week stopping by looking for a job. These job seekers are almost exclusively Hispanic and most speak very little, if any, English.

Key issues
•Managers must first look inward to honestly assess their own strengths and weaknesses and determine their own managerial style.

•Managers need to look at and evaluate the business culture within their organization and address the most appropriate means to foster a positive, cooperative and communicative climate.

•Accurate assessment of current conditions to determine businesses strengths and weaknesses in key areas is vital to success.

•Successful communication with your employees is critical to the success of your dairy.

•Realistic, consistent, clear and measurable goals need to be mutually set and agreed upon by the entire management team and be accurately communicated to employees.

•Careful thought and preparation should go into writing job descriptions, protocols and SOPs to accurately convey your expectations to your employees.

•Employees must be carefully interviewed and selected based on their ability and skills to perform the job.

•Employees must be adequately trained to follow established protocols and SOPs.

•Employees should receive coaching, frequent feedback and formal appraisals to continually develop and improve their skills.

•Instituting pay for performance incentives in the areas of calf raising, reproduction, feeding and milk quality may lead to outstanding employee performance.

•Conflict is inevitable. If managed properly, it can provide a platform to improve communication and productivity.

•Proper handling of employee discipline can motivate employees to succeed.

Analysis and self-assessment
A complete and thorough understanding of where you currently stand is imperative to reach your goals. An honest and extensive self-assessment is probably the most critical and difficult challenge faced by many people. We don’t want to know what we are bad at, what people dislike about us or what we are vulnerable to. This information comes to us at a price – the price of possibly being exposed, of being at risk and of possibly having to admit we are wrong and someone else is right. It is contradictory to our egos and may force us to face some ugly issues we have neatly tucked away to avoid others from seeing or ourselves from facing. Understanding your strengths and weaknesses, your predominant personality type and consciously being aware of the paradigm in which you see the world is the first critical step to effectively managing yourself and others.

Many resources are available to assist us in assessing ourselves. Peter Drucker believes most people think they know what they are good at, but they are usually wrong. He outlines an effective strategy to determine your strengths. People perform best from their strengths. The only way to know your strengths is through feedback analysis.

An effective feedback mechanism is (whenever you make a key decision or action) to write down what you expect will happen. In nine to twelve months, compare the actual results with the initial expectations. Within two or three years, this may tell you where your strengths lie. It can show your good habits, your bad habits or what you fail to do that deprives you of the full benefit of your strengths. It can show you what you need to do, where you need to improve or what new skills you need to acquire to succeed at your goals. It may also illustrate where your intellectual arrogances lie (the false belief that being bright is a substitute for knowledge).

Several other more formal and extensive assessments are available, such as the Meyers-Briggs Type Indicator and the Five-Factor Personality Model. Several large organizations utilize these tests to evaluate their employees and managers to assist them in placing them in positions where they might be most successful in their occupations and in helping to identify their strengths and weaknesses.

Stephen Covey in Seven Habits of Highly Successful People emphasizes developing a set of principles that guides one’s actions out of what he calls the character ethic (deep fundamental truths that have universal applications across many applications, situations and cultures). Fairness, integrity and honesty, human dignity, service, quality and excellence, potential and growth, patience, nurturance and encouragement are all characteristics that are associated with the character ethic.

Internal focuses (those qualities within that foster and develop success, including being proactive, having personal vision and being responsible) are the first steps to effective leadership in what he calls the inside-out approach. Reasonability is defined as having the ability to choose your reaction by consciously being aware that there is a controllable time frame between stimulus and response. Other internal critical elements include beginning with your end goals in mind and effective time management skills.

External behaviors (those behaviors that involve interaction with other people) are having a win-win attitude based on an underlying foundation of trust, empathetic listening and creative cooperation between individuals rather than competition, and are key elements to fostering a climate where maximum productivity and satisfaction can be attained by both labor and management.

Business culture
An organizational or business culture is defined as the system of shared meaning held by its members that distinguishes that organization from other organizations. Every business has a business culture. It is the set of unwritten rules inside an organization that determines people’s behavior and attitudes toward work. It is determined, often unconsciously, by the owner or founder and is reinforced by the organizational structure, reward system, stories, symbols, rites and rituals that surround the business.

Seven primary characteristics exist within a business culture:

1. innovation and risk
2. attention to detail
3. outcome orientation
4. people orientation
5. team orientation
6. aggressiveness
7. stability

Each of these characteristics exists on a scale from high to low within a business. Assessing the culture can be done by asking employees what they think about specific issues and attitudes within the business in the above areas. An honest appraisal and assessment may be difficult. An unbiased questionnaire performed by an outside source may be more effective.

Establishing a positive business culture must be a conscious endeavor by management and not left to chance. What kind of message am I sending to my employees by my actions and attitude? What owners pay particular attention to, how scarce resources are allocated, how conflict is resolved, how people are rewarded and promoted and how the leadership reacts in times of crisis, all send powerful messages to employees about the priorities of the business and about the character of the leadership.

Communicating with employees
Obviously, effectively communicating with your employees is critical to your success in all facets of your business. Communicating with your Hispanic employees represents many unique challenges. Translating instructions, protocols, goals, objectives and feedback all take on new levels of difficulty. Bilingual employees can translate most instructions for you, but this increases the risk for misunderstanding and miscommunication.

Software programs can translate written material, but the precision of the translation is quite often below 100 percent, and it is necessary for someone fluent in Spanish to review the translation for accuracy. Translation services can be outsourced, but this is often inconvenient and can create unwanted delays.

Current assessment and benchmarks
It is essential to monitor criterion in several critical areas. Milk production, disease incidence, forage quality, inventory, heifer raising, nutrition, parlor performance and financial ratios are all key areas in building a profitable business. Identifying and analyzing the various profit centers (such as heifer raising, farming and dairying) for return on investment and profitability will help determine core competencies and weaknesses, as well as areas to possibly outsource.

Several labor benchmarks have been established. These include milk sold per worker, labor expense per hundredweight of milk sold, labor expense per cow and cows per full-time employee. Benchmarks can be found at a variety of websites, as well as various university extension agencies. Veterinarians, nutritionists, agronomists, dairy consultants, lenders and extension agents may also be valuable assets to your management team that may assist you in benchmarking and monitoring criteria in your herd.

Goals and guidelines
All individuals having a vested interest in a particular business segment should be involved in identifying, setting and monitoring the criteria set to measure progress toward goals. This should involve management, key team members and essential employees. Unexpressed resistance or lip service by members can lead to subversion of the overall goals and sub-par performance or failure of the program.

The goals and criteria should focus on the results, not the process, at this point. Five very explicit elements should be defined:

1. desired results – what and when it needs to be done
2. guidelines, parameters, policies or principles in which to operate
3. committed resources – financial, human and time
4. accountability – standard of performance and definition of roles and authority
5. positive and negative consequences of behavior

Transferring this information and knowledge to employees accurately is also critical. Many communication obstacles potentially exist, even without the language barrier.

Communication can best be defined as the message received, not the message sent. That perception is reality for the perceiver. Effectively communicating your goals involves writing clear and complete job descriptions. Establishing clear protocols, SOPs and assigned responsibilities and then training your staff, give them the best possible chance of success. PD

References omitted due to space but are available upon request.

—From Kansas State University Ag Manager website

Matthew E. Jones, DVM