Successful farm operators have to juggle many duties and responsibilities on a day-to-day basis to make sure their farms are operating at peak performance. Rarely, if ever, does the concept of succession planning come up on the daily “to do” list. As a result, this process often gets pushed aside in favor of more pressing issues and tasks, and it becomes difficult to find the time to engage in a timely and effective planning process. That being said, a well thought out succession plan can help bring in the next generation of management and keep the farm business flourishing for decades to come.
Succession planning might mean different things to different people. In general it is the process of developing a plan for each key management position within the organization so that if and when the manager is no longer willing or able to carry out his/her responsibilities for any reason, a successor can readily be put in place.
Since this isn’t an exercise that most farm business owners have much experience in, it often takes help from trusted advisors to get it right. Attorneys, tax professionals and bankers are often needed at the table to help make sure all relevant issues are being thought about. Many people think of succession plans in terms of legal agreements, tax planning strategies, ownership transfers, life insurance, etc. But the really important aspects of succession planning are the tough conversations, assessment of strengths and weaknesses, letting go and growing into new roles. Here are some additional things to think about:
Get started as soon as possible. There’s no time like the present to begin thinking about and developing a plan. Whether there are multiple generations working in the farm business or a single farm family with no obvious successor, the issue of transitioning the business to the next owner(s) or manager(s) is critically important. The longer this issue goes unaddressed, the less likely it is that the results will be satisfactory to all.
Open, honest communication. All parties need to be willing to clearly and honestly communicate their expectations so that plans can be made without hidden agendas interfering.
Meaningful skills assessment. When working on a plan for management succession, it’s crucial to honestly assess the skills of the potential successor(s) matched against the skills needed for the role being considered. Sometimes it takes the help of a third party to provide objectivity to this part of the process.
Personality profiling. Since communication and teamwork is such an important part of management, especially in today’s larger farm management teams, it would be useful to conduct a personality profile for each team member. Then use a skilled third party to help understand what the collective profiles of each team member might mean in terms of working effectively together. This process can be eye opening.
There are many additional things to think about, but these are some important issues to consider and should help get you started.