Adding another perspective when making management decisions can help dairy producers identify blind spots and work through challenges. Peer groups and advisory boards are two ways to gather this third-party input.
“It’s very easy to put our head down and work,” says Davon Cook, principal at Pinion. “On any given workday, you have many things calling for your attention, and we can get very focused on working in the business instead of on the business. One of the things you are trying to accomplish [by adding an advisory board or joining a peer group] is hearing things from a different viewpoint from other people that are looking at your business.”
Cook coordinates Pinion’s peer group network that provides executive education to ag business leaders, in addition to guiding closely held businesses through estate and succession planning issues, setting up “right size” governance, tackling tough conversations and planning strategically for business growth.
Peer groups
For Cook and her colleagues, facilitating peer groups came about through the network they built working with clients over the years.
“We saw it as an opportunity for clients to learn from each other and with each other,” she says. “A peer group becomes a group of trusted individuals that you interact with over a number of years.”
Peer groups are comprised of business owners that have a fair amount in common and meet two or three times each year. They spend time learning from and with each other during meetings by sharing, benchmarking and giving advice to others in the group, as well as learning from speakers, trainers and other professional development content.
“You can learn something from anyone, regardless of the size of their business,” she says. “However, you need to be enough in the same ballpark that you are facing similar issues and similar complexity around employees, financing, etc.”
While meeting agendas can vary, they generally include time for members to share with each other and time for professional development training focused on management and ownership topics, the fundamentals of running a business and technical aspects.
Formats and sizes of peer groups can also vary, and groups may meet online, regionally or nationally.
“There [are] lots of ways to do the same thing,” she says. “Peer groups are scalable. The question is how much time and energy you have to travel to meetings and be away from your farm. Many of our groups are national, with members from different states.”
For producers wearing multiple hats on their farms without many employees or family members involved in the operation, she recommends starting locally to minimize travel time away from the farm by identifying a handful of other individuals from surrounding counties that are not direct competitors for markets or resources. There also might be existing peer groups in the area that producers can join, so it is not always necessary to start a new group.
However, peer groups can successfully incorporate members that are direct competitors.
“I know some people that are in a regional peer group together that [are direct competitors], have a high level of mutual respect for each other and know they aren’t going to undercut each other on a deal based on information they share. They make it work, so it comes down to agreeing on the rules,” Cook says.
Some peer group meetings may be held at members' businesses or farms, while others are held at a central location.
“If [a] peer group is visiting one of the member’s businesses or dairies and they see some things, they may not be relevant to you today, but it may be relevant at some point in the future,” Cook says. “[By learning from fellow peer group members,] you are increasing your sample size of situations you get to learn from, and that is so valuable.”
Advisory boards
Advisory boards are comprised of people outside of the daily management sphere of the business that can lend an outside perspective. There are several types, ranging from informal advisory boards to a fiduciary board of directors, that are scalable and can work for farms of all sizes. Cook says that a producer’s comfort level is a consideration for whether they should start with members already in their network or branch out to those with a fresh perspective.
An informal advisory board includes the trusted advisers that are already working with the operation, such as a banker, attorney and crop insurance agent, to name a few.
A formal advisory board adds structure to bring those individuals together for a meeting once or twice a year to talk through big or strategic decisions for the business.
“Even though it’s the same individuals you’d be talking to anyway, there [are] usually new ideas and new brainstorming that comes from people in the same conversation at the same time feeding off each other,” Cook says.
For those comfortable adding advisory board members that they are not already in regular communication with, consider utilizing existing relationships to add individuals with new perspectives that are not heard from regularly.
“With this group, you would usually pay them for their time. If you recruit the right people, they are successful professionals and have other commitments. You are asking these individuals to come and put your hat on and look at your business periodically to give advice,” Cook says.
A more formalized version of the advisory boards described above is a fiduciary board of directors that votes and makes decisions that have authority, as opposed to an advisory board offering opinions and input while the business owner makes the decisions.
To set up a new advisory board for your farm, Cook recommends completing a self-assessment to evaluate the management team’s weaknesses and considering which skill sets, life experiences and/or industry contacts are missing that would be helpful to backfill with an adviser.
Advisory board members do not need to be in the agriculture industry, and those outside the industry can bring a fresh perspective.
“If you look at your network from church or civic activities you are involved in or your kids’ school, you probably know individuals working in all kinds of industries,” she says. “We don’t always think to look there, but what if there is a manufacturing company that is going through the same labor challenges you are with finding [employees] or a restaurant in town that is also facing labor challenges? Any of those businesses are dealing with financing and regulations and a lot of the same challenges, just in a different context and a different industry. Sometimes, they may need some onboarding to get up to speed with some things about dairy, but they are probably going to ask some questions that really make you think about things differently and get outside your box. That’s how I would think through who to potentially recruit for an advisory board.”
Cook recommends having a clear vision and goals for the group before recruiting advisory board members. When contacting advisory board candidates, explain the goals and objectives for the group, and then treat it as a job interview to get to know them.
“If they are a professional worth being on your advisory board, they will probably have questions for you as well,” she says. “It’s like a hiring process, but less intense since you are not making the same level of commitment to someone.”
Cook advises meeting two or three times a year, but meetings could be more frequent if it works well for the group.
She also recommends three areas that should be included on the meeting agenda:
- Standing agenda items reported on regularly related to the success of the business from a key performance indicator or financial standpoint
- Hot topics and strategic questions that are relevant at the time of year the meeting is occurring based on decisions made in that timeframe
- Rotating topics to visit annually or biannually that are long-term topics important to the business, such as a review of risk management or human capital (organizational chart, planned growth for the business, other positions needed in the future, etc.)
Whether joining a peer group or building an advisory board for your farm, dairy producers are finding value in learning from other producers and business owners facing similar challenges and seeing their businesses from new perspectives.
To learn more about peer groups and advisory boards and hear how agricultural producers have utilized them, tune into season 4, episode 30 of the Progressive Dairy Podcast.
