Values and Vision ›› Strategy ›› Assets ›› Governance
Despite a farm’s success and strong family ties, a family can become fragmented and less unified over time.
This was the case with my friend Bob. He was so delighted when both his son and daughter decided to come back to the family farm. In addition, their spouses also chose to join the operation.
For the first year, it was smooth sailing. Together, the family made plans to expand the dairy operation. Then, in a blink of an eye, things went south. No one agreed on the methods, operational protocols or roles. There were even disagreements about the culture and farm values.
Bob was discouraged; he assumed they would all be in constant agreement since his children were raised on the farm. He did not believe there would be any conflict among family members, the same people who loved each other.
He felt his family had reached a roadblock.
It’s natural for the founders of the family farm, like Bob, to assume the family is in complete agreement and under the same assumptions on the vital farm activities and practices.
As farms transition from one generation to the next or add more family members to the team, the family may become less unified over time.
Often there are more assumptions than actual communication around crucial topics. In most cases, these topics are not discussed, and they are part of the culture. Yet values and culture can change if it is not often reaffirmed and communicated to all parties.
Why does a family tend to splinter apart? Each generation beyond the founder has a slightly different set of values passed to them from other parents. In Bob’s case, the brother and sister were raised the same, but they each married someone different and raised their families differently. These differences are magnified over time and are a significant reason family farms often don’t last three or more generations.
An unnatural solution is to reaffirm core values, principles and culture based on the following areas. However, if you have these crucial conversations around family farm governance, the odds significantly increase the ability to continue your family farm’s legacy.
- Decision-making: Who can make what decisions, and how are those decisions communicated to the leadership team?
- Transition planning
- Creating accountability to each other and the business
- Developing the next generation to lead
- Methods for managing conflict
- Establish compensation policies
- Designate methods for determining reinvestment and payouts
- Strategic planning process
- Who can join the family farm and under what conditions?
- How does someone exit the business?
Having conversations around these topics is hard. Sometimes an outside facilitator is needed to keep the process moving forward. There are no perfect answers to any of these topics, and what works for one farm family may not work for another. Family governance is unique to each family farm. The agreements you choose to develop regarding governance and their discussions are crucial to your farm’s legacy.
Bob and his family spent months working on redefining their values and creating policies concerning family governance topics. It wasn’t an easy road. However, the family is now working together effectively and without conflict.
Those who put the work in will reap the benefits.
