Management can be a difficult issue in many family farms because of the closeness of the family members, Aaron Clark noted during the Washington Women in Agriculture Conference in East Wenatchee this spring.
A lack of leadership and foresight is one of the main reasons family businesses fail, said Clark, who is a fourth-generation orchardist and works as field manager at Price Cold Storage and Packing Company, Yakima, Washington. He also is involved in a family orchard business with his two brothers-in-law.
Leadership differs from management, Clark explained. A manager runs the system that’s in place in the most effective way possible. For example, a manager might be responsible for keeping irrigation systems or safety programs operating.
A leader is able to look at the system, decide what the system needs to look like in the next two to four years, and figure out how to get there.
“I don’t think we develop leaders very well in our farms,” Clark said. “We don’t develop them very well in our communities or in society. There’s a lot more to it than just running the system.”
Leaders should have integrity, Clark said. They should not present themselves as something they’re not. They should be good listeners, should seek out information, and should look to people who might have better ideas.
“A lot of times, we don’t spend enough time listening to people around us,” he said. “The tendency is to go to people who seem to be successful, and industry leaders, and we’re not so quick to listen to the kid we hired to change the water for us who’s been there for two weeks. But what he’s got is a fresh perspective. There are a lot of ideas that come from people who may not know a lot about your business. Be willing to listen to a wide variety of people.”
In a family business, a leader needs to be connected with the people who work there. “If you don’t have their heart and they don’t know you care about them, they won’t follow you,” Clark warned. “Our businesses are not that big that we can’t know the names of all the people who work for us, and all their spouses, and all their kids.”
Managers often talk about having an open-door policy, but that puts the onus on the employee to make the connection. “It’s not their responsibility to connect,” Clark stressed.
A leader needs to know the difference between activity and accomplishment. What’s important is what gets done, not how many hours are worked.
“We have to work smart, get all the input we can to make the right decisions, and lead people, and if we can do that, we have a better chance of being successful,” he said.
Family members and employees need to be empowered to be part of the business. Empowering employees leads to multiplication of leadership, and that will grow the business. But there are many reasons why leaders don’t empower others. One is job security. For example, they don’t want others to learn more than them. As Junior starts to assume more authority, the father might become panicky, especially if Junior’s ideas are a little different.
Lack of self-worth can make people reluctant to empower others. Often, their self-esteem is wrapped up in the success of the business. “We have to be careful that we don’t take too much of our self-worth from our jobs because it doesn’t allow us to give of ourselves to the people we want to empower and transform into leaders,” he said.
Leaders need to be quick to give rewards and to give credit to others. It’s demoralizing to employees when they’re not given the credit they deserve, Clark said. Leaders should also be quick to take the blame for mistakes and help employees to put them right.
Positions of ownership in family farm operations need to be based on ability and influence, and not on name, Clark suggested.
“I think it’s a mistake to let Junior think his whole life that he’s going to be part of the family business if he wants to. It’s not a right; it’s a privilege. We also have long-term employees that we work with and if you bring Junior along too quick and put him in a position of leadership over people who know better than he does, you put him in an adversarial relationship with the people he’s going to lead. It may be that the employee is a better candidate to be part of the ownership or leadership team than Junior.”
Young family members should complete their education and then go to work somewhere else for a while before joining the family business, he suggested. “They need to go out and make their own way, and have their own victories and failures, and understand what it’s like to work for a living.”
Often, families give their children the job of driving the tractor or other midlevel jobs, rather than have them work out in the field in the hot sun all day long. “If he doesn’t do that, he doesn’t know what it’s like to try to make a living at $8 an hour,” Clark said. “Pedigree is not important.”
Agree to differ
When it comes to decision making in a family business, there must be unanimity. Meetings should be held regularly, perhaps monthly or quarterly, with an opportunity for the family to socialize afterwards. Everyone has to agree, and agree to differ on things that become problematic, Clark warned. If that can’t be done, it might be necessary for a family member to leave the business.
It’s important to have a mechanism for people to get out, and it’s best if a buy-sell agreement is drawn up at the beginning of the partnership. “If you can’t work out the terms, that tells you everything you need to know about your relationship with this family member,” he said. “It’s not going to work out.”
Failures in family farm businesses have much less to do with the nuts and bolts of day-to-day activities, such as what or when to plant, and more to do with a lack of leadership, Clark concluded. “They’re almost always about a lack of empowerment, a lack of leadership, a lack of foresight. If you refuse to empower your employees and empower good leadership, your chances are zero. You can tough it out for a few years, but eventually your business will fail.”