How effective transition planning can unlock your inner CEO
Transition process forges valuable CEO skills
If you were to combine all the skills you’ll learn as you go through the farm transition process into one job description, it could be called “Farm Manager/CEO.” The abilities you develop as you move through a transition are like those of a progressive Chief Operating Officer or CEO. Learning and mastering these skills can contribute to a smoother transition and positions the farm business for future success.
What is a Farm CEO?
In Keep pace with learning and training, we described a farm CEO as someone who understands the business at a granular level but can also stand back, motivate, lead and cast vision.
In the non-farm business world, top-performing chief executive officers run their businesses with medium and long-term goals in mind. It’s about the big picture and developing the strategy to meet defined goals and objectives. A CEO that micro-manages every minor decision on a minute by minute basis can potentially hold back the company. A good CEO can plan effectively, set the course, delegate responsibilities and motivate those around them.
Why a farm transition requires you to grow as a leader
A farm transition – or any transition of ownership and control involving a family business – is a mix of three bottom lines.
The needs of the family who have a connection to the farm and its legacy. Successfully addressing all the individual needs of family members involves creating a process that is viewed as being fair to everyone involved. Remember, fair is not necessarily equal. Fair is when a transition plan is structured so that everyone can have their opinion heard and decisions are made based on a defined process - getting to the point where everyone feels heard and understood takes time and will involve emotion. It’s family, after all.
There’s the money involved. You may need to deepen your knowledge about financial statements and ratios, technical transition transactions, structures and law - and myriad other things that can't be managed or understood by just listening to your gut instincts. The process requires that you fully understand the financial and other realities at play and deal with differing opinions on moving forward. The issue of money – whether there’s a lot of it or not enough – can lead to strong emotions and conflict.
The issue of control. Ownership and control of assets are likely to change through the transition. The senior generation might resist giving up control for fear of becoming irrelevant, and the younger generation might not have the skills yet to take over the operation. The mindset and skills of a CEO help both generations to navigate this process.
Get ready to grow
Good CEOs keep their 'finger on the pulse' of day-to-day activities but equip the team to operate while they’re working on business management and planning.
You’re going to grow as a manager and a leader as you make your way through the farm transition process. That doesn’t mean you have to give up changing a bearing or pulling a calf. Farm CEOs are unique in that they have all the “hands on” experience and skills required to perform front line farm tasks, but also need to know how to run the business and steer it towards success. Good CEOs keep their 'finger on the pulse' of day-to-day activities but equip the team to operate while they are working on business management and planning.
It’s important to view a farm transition as a training exercise that will help the next generation manage the business into the future. The tactics, strategies and thought processes that you’ll learn by going through a farm transition will come into play as challenges arise post-transition.
Permit yourself to grow, make mistakes, try new things, ask for help, and continue to learn. Self-assessment is a big part of this. Maybe you’ve recognized the need to become more organized and start using a day planner app. Or maybe your fear of running a formal meeting and speaking in front of the team needs to be addressed. Learning to designate roles and responsibilities and step away from some tasks is key to being a CEO. A management style of shooting from the hip and making decisions on the fly might not be the best approach as the business grows and evolves.
Communication is a core skill
The best CEOs are great communicators. They know how to connect with family members involved in the business, staff, advisors, clients and the public. Whether it’s verbal, written, or combining the two, delivering positive messages and clear direction is what it’s all about. You can be the best farmer and the best financial manager. But, if you cannot communicate effectively, the business is not benefiting from all that knowledge and expertise.
Lead your team
You’re not a passenger, you’re driving the bus, but you still need to work well with others. Hire smart people and listen to their advice before making decisions. Go back and read Building a solid transition team.
Lead your family
Whether you are the oncoming generation or transitioning out of the farm, you’re going to be leading your family through new territory, and there will be challenges. Emotions can run high and there will be differing opinions on how to move forward. Most people have a fear of conflict and look to avoid it. Leaders and CEOs know that working around conflict is the worst thing you can do. You’re just deferring the argument. Over time, the energy in an unresolved conflict increases and things get worse. Your creative options for resolving conflict diminish over time. Experts say that 80% of family business failures are due to family dynamics that have been ignored. Some families resolve these challenges by finding a formal or informal advisor who facilitates discussions for controversial decisions.
Think more about acknowledging and managing conflict and steering the team through the process. Everyone needs to be heard. The CEO's job is to develop a decision-making process that everyone agrees to at the onset and is consistent in resolving issues. Stick to the process. Be disciplined. Try to take emotion out of the discussion wherever possible. Often the biggest challenge for the CEO is to both manage the conflict and still participate in the conversations.
Mastering the art of dealing with conflict isn’t about ruling with an iron fist or being an overbearing boss. There are courses you can take to help you learn how to communicate effectively while dealing with disagreement and conflict. Even with training and experience, not everyone is equipped to deal with conflict. Getting help from a professional facilitator is much better than struggling to push through on your own.
More open, productive communication is one of the most important ways you can contribute to the health of your business. It’s worth figuring out.
How to navigate a stressful conversation
Communicating with the family can be especially hard, and a farm transition involves sorting through family issues.
Next time you’re faced with a stressful conversation, do the following:
1. Timeout
When people are stressed or anxious, they lose their ability to speak, think and listen. So, if you feel your blood pressure rising or your brow getting sweaty because of fear, anxiety or anger, ask for a timeout so you can cool down and collect your thoughts.
2. Prepare
Write a script beforehand if you know you will have to say something difficult at the next meeting. Think about not only making your points clearly but also addressing what it means for the others in the room and how you’ve considered their interests in your thought process. Emphasize your desire to come up with a plan that works for both perspectives.
3. Practice
Get a third party to help you with your script and do a few dry runs in presenting it. Find out where you’re at risk of being misunderstood and fix it.
4. Place
Carefully choose the time and place for the conversation. Come in calm and establish an environment for a constructive discussion.
Watch this video with more about how to navigate a stressful conversation.
You can view farm transition as something to just get through and leave behind but, it’s an ongoing process that can be a personal and professional transition as well. With the right mindset, your growth as a leader and CEO can be the most exciting and enduring part of the transition pathway.
The last step in the transition is to embrace that it’s an ongoing process and subject to change.
From cash flow planning to net worth statements, get the basics you need to prepare for a loan application.
Transition looks different for every family. Use our planning tool to help you identify where you are in the process and what to do next.