In our 37+ years of business, we have seem many family farms change ownership. Often, we'll get the call "My son will be ordering sawdust bedding from now on." Planning succession of your farming business is complicated. An excellent resource, FamilyFarmSuccession.ca can help with questions, steps to take, and considering all options.
The following article deals with how to navigate family dynamics in farm transition planning:
A farm transition plan, a farm succession plan, an intergenerational transfer plan, a farm continuity plan – no matter what you call it, the process of planning a successful transition of a farm business from one generation to the next can sometimes be a minefield of family dynamics.
Two family coaches identify some common areas of family tensions in the farm transition process. They also outline some first steps to help farm families start to defuse those mines and begin creating the family’s unique pathway to a successful transition and purposeful future for all family members.
Dealing with barriers to getting started
For some families, just getting started on farm transition planning can be tough. “A lot of times I find farmers are very anxious and overwhelmed and they tend to procrastinate because they just don't know how to start,” explains Elaine Froese, a farm family coach based in Boissevain in southwestern Manitoba. “Sometimes people say, ‘I’m too busy to plan.’ They are busy working, working, working in their business, but they are not working on their business as much as they need to. Sometimes people have what is called avoidance behaviour – they don’t want to make the wrong decision so they don’t make a decision at all, which is paralyzing them from getting good planning done.”
She adds, “Some people know they need to do this work but they are not doing it because they think it is too hard. But it’s not that hard. It just takes intention, and it takes somebody in the family to be the driver of the process to make sure it doesn’t get stuck.”
“Successful planning processes usually have a champion in the family who actually takes up the baton and runs with it,” says Bob Tosh, a farm and family business advisor in Saskatoon. “Those family members who are in front of everybody else on this issue should start learning about transition planning.”
To learn about the transition process, you can access a wide range of resources online, including articles, webinars, videos and more, and you can sign up for workshops, find advisors and join an organization. Tosh suggests people consider joining the Family Enterprise Xchange, an association of business families and their professional advisors. “It has an awful lot of help for families to begin to understand the process. And, more importantly, it has a system of mentorship so families can actually talk to other families who have gone through it.”
With all the different names for the transition process, think about how you name it in your family discussions. “ ‘Succession’ implies that somebody is getting kicked off the throne. I like the term ‘farm transition’ because it is an ongoing journey and process. It is a transition of labour, management and ownership, and those things happen at different ages and stages,” Froese says.
You could start transition conversations by chatting with other family members about what you are learning on the topic. You could call a family meeting to initiate the process. And you could bring in a facilitator with experience in family coaching and succession planning to help everyone understand what is involved in the process, to work on issues like understanding why some individuals are reluctant to start the process, and to help the family move forward.
If you want to hire a facilitator, one place to look is the Canadian Association of Farm Advisors (CAFA) website. It has a listing of farm advisors, such as farm family coaches, accountants, lawyers and agrologists, and includes information on their areas of expertise. CAFA is a professional organization dedicated to assisting farm businesses by increasing the skills and knowledge of farm advisors. “All across Canada there are advisors who are always growing their practices and their expertise to empower farm families,” says Froese, a CAFA member.
Tosh has a Family Enterprise Advisor (FEA) designation through the Family Enterprise Xchange’s certification process. He says, “I suggest seeking out professionals who have that designation, who have clearly gone beyond their accountancy designation or their legal designation or some other designation to explore the unique challenges of family-owned businesses.”
Overcoming a culture of poor communication
Resolving family tensions around transition planning requires open, clear communication, but that can be a serious challenge in some families.
“Often a culture of poor communication or lack of communication, either between parents and children or between siblings, exacerbates problems,” Tosh notes. “We see habits of conflict avoidance or habits of accommodating conflict rather than addressing issues. We see an awful lot of what is called ‘triangulation’ where typically Mom carries the responsibility of trying to keep the peace.”
Tensions can also arise from not dealing with “the bull in the middle of the room,” Froese notes. “The bull might be addiction to alcohol, to drugs. It could be mental health issues, where dementia is starting to creep in, or a bipolar depression or low-grade depression that is not being addressed and people with depression don’t make rational decisions.”
If you’re looking for a place to begin working on these types of problems, Froese’s website offers a free Farm Family Toolkit to help families communicate, an online course called Get Farm Transition Unstuck to help identify and address the barriers to the farm transition process, and her book, Do the Tough Things Right, about how to prevent communication disasters in family business.
For families who are struggling with a tangle of conflict and poor communication, a family coach could be vital to enabling everyone to have open, honest discussions and to learn new behaviours that will help all family members feel their input is valued. Froese says, “Once you have everybody calm and talking and able to have adult conversations and deal with the conflict, then you can actually make amazing decisions because everybody is feeling trusted and respected and heard.”
Tackling tensions around roles, responsibilities and letting go
Another area of tension is around transitioning of roles and responsibilities. “It’s a very classic issue to see Dad struggle with letting go of management control. Subconsciously many men feel: ‘If I stop being the boss and I stop making the decisions, then I lose my identity,’ ” Tosh says. “So there can be a lot of tension between the incoming generation and the outgoing generation over management control. If the incoming generation doesn't recognize this issue and starts pushing, then the older generation will likely push back. The incoming generation needs to clearly demonstrate their appreciation for the lifetime’s work they are being allowed to take over and take on.”
A related problem is that many farmers are not very good at developing interests beyond the farm because the farm tends to consume all of their time and energy. They may not have a vision of what they will do if they stop working full-time on the farm.
“The people who are happiest are the ones who have purposeful lives and are happy with reinventing their roles as they age,” Froese says. “As a coach, I can help them find clarity around what their roles should be as they get older because they are not going to quit, but their roles need to change.”
To develop a plan for transitioning roles and responsibilities, Tosh recommends first formally identifying the various roles and responsibilities and then talking about how transitioning could happen. “We can introduce governance models that help with decision-making processes and understanding how the family makes decisions. Traditionally it will be Mom and Dad, but in some farm situations it’s the siblings, and there we’ve got birth order and gender issues that we need to deal with. And the family needs to decide: do they have a hierarchy, or an egalitarian system of decision-making, or a mixture of both depending on what the decision is? These are all discussions that we need to have.”
He adds a general tip: “One of the best sayings I’ve heard is: ‘Formality will be your friend.’ Formalizing processes and structures, formalizing communication, formalizing rules and agreements – these are all things that will help the family have the right conversations.”
A central piece in discussions on roles and responsibilities is to discover what every individual in the family truly wants for the future. Froese says, “Everybody has to figure out what they want and why and when. Again, this is not that hard. You just have to think about it.” Once the family has clarity on everyone’s goals and timelines, they can build the framework for the transfer of responsibilities and roles.
Addressing inheritance, fairness and greed issues
Although transition planning is different from estate planning, the senior generation’s plans for their estate often come into the transition planning process. And the details around who will inherit what can spark family conflict.
“With the huge value of land and assets in farming and the balance sheets having extra zeros on them, the greed factor rears its head,” Froese says. “So you’ll have a farming child who wants to work with the business going forward, but he or she discovers that their brothers and sisters feel like they need to get a quarter of the farm. And the parents are losing sleep at night because they don’t know how to explain to their non-farming children that those children are not getting a raw deal or even how to answer the fairness question in their own minds.”
Tosh notes, “If [the distribution of assets] is not equal, then family members need to know why. The important piece of ‘fair’ is fair process. Fair process requires open, honest, transparent discussions with all family members because successful families recognize that all family members should have the opportunity to prosper.”
Finding a work-life balance
Being exhausted from working too many hours, getting too little sleep and juggling too many balls can be an issue for both generations on a farm. Exhaustion can lead to short tempers, trouble concentrating and difficulties with decision making.
But Froese emphasizes that letting the farm consume your life is a mindset. “On our farm, we don’t work on Sunday. I say this to my audiences and they think, ‘Are you kidding me – you’ve got 5,000 acres.’ But our employees love it because everybody gets a rest on Sunday. Then we gear up for another very busy week. And we make it work,” she says.
“So here's the question: does the family serve the farm or does the farm serve the family? Your answer to that question sets the culture of your farm. As Peter Drucker [a well-known management consultant and author] said, ‘Culture eats strategy.’ You can have all these lovely plans, but if the farm is not a pleasant place to work and be, and if not everyone is working towards the same goals, then those plans won’t do anything.”
Froese’s perspective is: “If you take care of the family first in terms of economic well-being and purpose and stress management and all that good stuff, then the foundations of your farm are solid because it’s really the people. If you have people who are aligned and energetic and healthy, then your farm will be firing on all cylinders.”
By Carolyn King - Source: www.familyfarmsuccession.ca
Thank you to our customer Country Golden Yolks for the photos!
