"If you don't drive your business, you will be driven out of business.” This quote is by B. C. Forbes, the founder of Forbes Magazine, and runs doubly true for farms and businesses with more than one key owner or leader.
When I grew up in the Thumb of Michigan, driving to town we passed 30 or more farms. Each was small and had one individual key decision-maker. Today, ranches and farms are much larger, and an increasing number have multiple key leaders and decision-makers. Whether they are legally organized as a partnership, corporation or even a sole proprietorship, these farms are led and operated as a partnership. Partnership is the term we will use in this article.
The ranch or farm leadership team is the owners (partners) in a multiowner small or family business (ranch or farm) who have the responsibility of ensuring business success. The team – partners – are responsible for the strategic direction of the business and for establishing key structures, policies, decisions, etc., required to implement that strategic direction. This includes:
- Vision. Everyone needs to know "why" what we are doing is important – the motivation.
- Strategy. The direction we are taking to fulfill our vision – our direction to success.
- Farm culture. The way we behave as we implement our strategy to fulfill our vision. Requires alignment of strategic leadership, workforce passion and operational excellence – drives what we do every day.
- Implementation. The key structures, policies, decisions, etc., required to implement that strategic direction.
Leading a ranch or farm leadership team is very different from running a sole proprietorship. To crystallize our understanding of the difference, we use my favorite model of team decision-making (Figure 1).
Successful implementation of team decision-making requires agreement on the vision and mission of the farm, represented by the red rectangle. This provides the criteria for decision-making. Both the sole proprietorship and the partnership require the blue “gathering information” phase to gather and analyze information. The difference is the green “reaching a decision” phase. For the sole proprietor, the “reaching a decision” phase (the right-hand diagram) can be represented by a dot – the decision the sole proprietor makes. Partnerships, by comparison, require discussion and debate to reach a decision, as shown in the left-hand team decision-making diagram. The transition from a sole proprietor to a partner can be exceedingly difficult. The advantage of the partnership is the collaboration in the discussion and debate to reach better decisions.
The following are keys I have observed to partnership success:
- Clarity and agreement on the mission, vision and values for the ranch or farm family business. In my experience, failure to articulate and agree on the vision and mission for the business is the most common cause of partnership breakups and dysfunctional partnerships. As shown in the team decision-making diagram, the vision/mission serves as the criteria for making all decisions. I often say that without a common vision/mission, every decision can become an argument because the partners are basing their decisions on different criteria. If you are in a partnership and have not articulated the vision/mission, do not pass go, do not collect $500; start a process to articulate and agree on it. You may need some outside assistance in that discussion.
- Discussion, dialogue and even debate are encouraged and constructive. This is the real advantage of a partnership. The dialogue, especially in the "reaching a decision" phase, leads to improved decisions based on the strengths, experiences, perspectives and knowledge of the partners. Synergy is created by everyone expressing their ideas, perspectives, concerns and even hunches. The discussion, especially the questions and criticisms, must be about ideas, not about people or personalities. It is the leader’s responsibility to create an atmosphere of trust where everyone is free to speak and to disagree. Without trust and respect between partners, this advantage is lost and the business may be at risk due to poor decisions.
- All partners believe they have input into key decisions and rally behind the option selected. This is basic to any team and crucial to a partnership. It is also the greatest challenge in moving from a sole proprietorship to a partnership because it requires a major change in the perspective of the former sole proprietor. The former sole proprietor must accept their new role and work – provide leadership – to meet the previous two keys.
- Leadership team structure and operation are clear and agreed to. Each partner is held accountable to those expectations. The involvement of several partners, especially with three or more partners, requires structured meetings to capitalize on the collaborative advantage. I have developed a template you can use to develop the policies and operating rules for your leadership team. I also have a suggested structure for the leadership team meeting agendas. Note that the second column asks for the objective for each agenda item. I have found this to be crucial to clear expectations of all partners. Email me for either template.
- Clearly identifying what decisions should be made by the leadership team and what decisions and responsibilities are delegated to individual partners and key employees is one of the key and continuing issues. I have developed a worksheet that can assist you. Email me for the worksheet.
It is important to understand that being a good partner is difficult and requires hard work. Perhaps the greatest challenge is that the availability of someone else to blame is an ever-present danger. Collaborating requires unusual amounts of authenticity, humility and accommodation. Each partner must avoid the ease of:
- Straying from the shared vision.
- Overestimating your own contributions.
- Underestimating your partner’s contributions.
- Seeing your partner’s weaknesses clearer than their strengths.
Having an effective leadership team is one of the most important contributors to business success, partner job satisfaction and workforce engagement. Effective leadership teams, especially with multiple family members including multigenerational, are things of beauty to me. I encourage you to set a goal of improving the functioning of your farm leadership team.
