Generations & Family Partnerships - Transferring management skills to the next generation is a process in succession planningWritten by Natasha Wheeler
Deadwood, S.D. – “One thing I love about agriculture is that we teach hard skills and ethics to the next generation every day,” states Rick LaPlante, a business and leadership consultant.
“We teach the ethics of hard work, fairness, honesty and keeping our word,” he explains.
Hard skills, such as roping, branding and fencing, are taught, as well.
“Sometimes, we do not teach very good leadership skills,” LaPlante adds.
Many times, lessons on the ranch are accompanied by phrases such as, “I told you so,” “Because I am in charge” and “It will make sense when you are older.”
“When it comes down to teaching important stuff, like how to run a business, we kind of fall down on the job,” comments LaPlante.
To change that trend, he advises producers to be intentional when working with younger generations and future heirs of the farm or ranch.
“We should start with strategic options before we decide what succession of our business looks like,” LaPlante notes.
Producers, he suggests, should take stock of leadership, business sectors and goals within their operation.
He explains, “Maybe we have a trucking company that we think could really grow. Maybe we own feedlots. Do we have multiple businesses, and do we have multiple leaders?”
Those entities could possibly be separated before full succession, with future heirs managing sectors they may one day own.
“Look at internal and external willingness,” he suggests.
Talk to the family and find out which aspects of the business they are interested in, LaPlante says..
“At the same time, we have to think about plans for the other family members,” he warns.
To have everyone buy-in to the business, everyone needs to have a role, even if they are not the next owners of the farm or ranch.
Once there has been some discussion about what family members want to do, LaPlante says, “Evaluate. Start thinking about jobs and required skills, both hard and soft.”
If one child is especially good at horsemanship, but not as good at bookkeeping, perhaps the next CEO of the business should be the child with more interest in accounting.
“Do a gap analysis. Look at what skills the future CEO might need in five or 10 years,” he suggests.
A gap analysis looks at the required skills for a position and identifies where there is a gap or which of those skills might be missing.
“Then we do some training,” he states.
Once the business has decided who is willing to fill certain roles and who will be best suited for those roles, there is always room to learn more.
“What we are trying to transition is the process for making decisions,” he states.
He also points out that it is not just the transfer of knowledge that must be made, but it is also about relationships.
“We have to transfer not just the knowledge of how to market, price and sell cattle but also the relationships to the people we know who do those things,” he says.
For example, the heirs of the business should know which cattle buyer might be able to offer a better price or which feed supplier has the best quality of grain.
“We need to think about our heirs as employees and remember that employees learn by watching and doing,” he notes.
Over time, skills and responsibilities should be transferred through a more formal process.
“Start with mentoring the next generations, and do some training. Eventually, start treating them as partners and let them make some decisions,” LaPlante advises.
Letting the next generation price out cattle one year and then going over those numbers together before any phone calls are made is one example that he provides.
“Being a CEO is really just about the decisions we have to make versus the decisions that everyone else has to make,” he comments.
If family members are incorporated into the workings of the business, then they do not wake up one day with the weight of the world on their shoulders because they have suddenly inherited a business that they have never had any experience managing.
“Eventually, all of the decisions end up with the next generation,” he says. “Think of it as a process.”
LaPlante spoke at the Joint Wyoming and South Dakota Farm Bureau Young Farmers and Ranchers Conference in Deadwood, S.D. on Jan. 16.
This article is the third part in a multi-part series on transitioning the ranch to the next generation. Look for more about family and generations in agriculture in future editions of the Roundup.