Many dairy farm businesses are family-run operations that span over multiple generations. While the joy of working with family can be rewarding, challenges often arise on personal and professional levels.
During the Center for Dairy Excellence’s 2020 “People Side of Dairying” webinar series, Dr. Rob Skacel, business psychologist at True Edge Performance Solutions, led a session designed to help dairy professionals navigate family businesses.
“The rewards of family business can be great, but the potential for problems increases as the number of family stakeholders grows,” Skacel said. “The more people in the mix, the more difficult it can be to manage the interpersonal tensions and complexities. The potential for challenges increases.”
Throughout the session, Skacel shared strategies for managing business-related conflicts that arise between family members and discussed ways to improve and sustain healthy farm performance and family functioning.
Challenges unique to family businesses
Compared to a traditional work environment, how is family life different for dairy farm families who work together? During the session, several dairy producers shared their thoughts:
- It can be difficult to leave work at the “office” when everyone at home is your co-worker.
- Work issues often come home with family members; they don’t always stay at the office.
- The lines between professional and personal are difficult to draw.
- There can be added pressure. Individuals may feel like they are under a microscope because they’re both a family member and an owner.
In addition, it can be difficult to receive objective assessments on performance in a family business. This can stifle growth and hinder family members from developing skills that could benefit the farm.
“Most of us like to know how we’re doing, but sometimes in a family business, other family members don’t want to weigh in on your performance. And non-family members may feel like it’s too dangerous to evaluate your performance,” Skacel said. “Family members can sometimes get cheated out of opportunities to grow and develop because of their stature as a family member of the business.”
Fear of hurt feelings can also cause many farm families to avoid conflict and ignore tension until it damages the business. To combat some of these challenges, Skacel went on to share five variables that can drive family and business performance.
Five pivotal variables
Skacel encouraged attendees to ask themselves these key questions when creating a roadmap for their families and employees.
- Control – How will the family make decisions about management and ownership of the business? How can you make these decisions in a fair way?
- Career – How can you make it possible for family members to pursue rewarding careers or other careers on the farm (or perhaps outside of it)? Skacel added that without talking about the “career” variable, many families end up with kids who join the business out of guilt or some sense of pressure – which isn’t healthy for the family or the farm.
- Capital – How can you create a system so family members can reinvest or sell their investments without damaging other family members’ interests? “Sometimes family members who didn’t think they wanted in the business now want in. Other times, family members might want out. It’s important to clarify how you’ll bring people in, or how they will get out, and communicate your expectations clearly,” Skacel said.
- Conflict – How will you address the conflicts business families face because their work and personal lives intersect so closely?
- Culture – How will you use family values to develop plans and actions? How will you define and build on your legacy business?
After considering these variables and identifying their place in the family business, Skacel identified several strategies that can help dairy farm families move forward in their management journey.
Strategy 1: Establish clear communication
In order to achieve better outcomes, Skacel advised farms to plan ahead and communicate openly about family-business issues. Instead of waiting to address conflict when tension is high, families should communicate about potential pain points when everyone is clear-headed.
“You have to ask yourself: Are you going to have difficult and uncomfortable discussions up-front about things like money, professional development and sibling rivalries? Or will you avoid those discussions as long as you can until you’re in the thick of a crisis and emotions are running high?” Skacel asked. “In many cases, families want to keep the peace and not make waves to avoid the immediate pain and conflict. But pain can actually be easier to address before it grows.”
One strategy for addressing pain before it escalates is to genuinely ask your family members for their perspectives. Skacel suggested starting with this question: How is the farm business most valuable to them? Is it an asset for financial wealth, an avenue for family members to work together or a legacy and identity for the family for generations to come?
“Asking this question to your family members can help you determine the best path forward. Their perspectives can be telling,” Skacel said. “For example, their answers might help inform you if you’re considering selling the business or looking to have your children take over.”
Strategy 2: Clarify roles and boundaries
For many dairy farms, it’s common for family members to serve multiple roles – owners, managers and family members – all in a single day.
“It’s typical for business families to blur these boundaries, which can contribute to dysfunction in the business and in the family. It’s very important to manage these boundaries carefully,” Skacel said.
To navigate these boundaries, Skacel provided a few suggestions:
- Wear one hat at a time, and clarify which hat you’re wearing during certain situations. When you work in all three realms, it’s important to be aware of which role you’re functioning in. Try to operate in only one role at a time.
- Establish clear lines of reporting between ownership and management.
- Clarify what you expect from management and hold them accountable to perform. There can often be reluctance and difficulty being objective, but high performance cannot be achieved without a strong accountability system.
- Resist the urge to give all family members equivalent roles in the management realm. Instead, assign roles that maximize each family member’s talents and contributions to the overall success of the operation.
- Schedule specific ownership, management and family meetings. This gives you a forum to address particular types of conflicts and streamline boundaries across all roles.
Strategy 3: Prepare for conflict
It’s common to avoid conflict, especially in a family business. However, Skacel reminded attendees that healthy conflict can contribute to new ideas, improved decision-making, growth and enhanced engagement.
“Conflict is often healthy. When people feel free to disagree with someone, they will often be more creative and generate new ideas,” Skacel said. “When people feel like they have been able to speak into something, they’re more likely to commit to the group’s decision if they’ve had a chance to air their differences.”
As you navigate conflicts as a family, Skacel urged dairy professionals to be aware of their conflict management styles and examine how they typically approach difficult situations. Can you inadvertently appear aggressive? Do you avoid conflict until tension gets too high? Weighing the costs and benefits of each management style can help you prepare before conflicts arise.
“If you think ahead about how you’ll approach conflict, you’ll be more likely to deal with it in a healthy way. If you wait until you’re in the heat of the situation, your head won’t be clear, you will be highly emotional, and it’s not likely to go well,” Skacel added.
Remember the good stuff
While managing a family business can be challenging, Skacel encouraged attendees to remember the good stuff. Why did you go into business together in the first place? What’s working well in your relationship? Having these types of positive discussions can set a constructive tone and remind family members why they decided to go into business together.
Skacel also suggested initiating positive interactions and practicing caring behavior toward others.
“This can feel artificial and structured at first, but it can swing the momentum in a positive direction. You can control your own behavior, so your best mechanism for moving the momentum from negative to positive is for you to show care and concern for the other person,” he said.
