Moving the Dairy to the Next Generation

11/24/2012 7:00 AM
By Charlene M. Shupp Espenshade Special Sections Editor

SUMMERDALE, Pa. — If there is one certainty in family business, for it to continue as a multigenerational enterprise, a leadership transition must take place.

What that transition will look like is dependent on the family members and the relationships between them.

The Pennsylvania Center of Dairy Excellence has enlisted the help of the S. Dale High Center for Family Business at Elizabethtown College to assist families through the pitfalls of business transition.

Earlier this year, the centers transition trainings with dairy professionals. This week, they held transition training for dairy farm families.

John Frey, executive director for the Center for Dairy Excellence, said passing on the farm is not the easiest of projects.

The center surveyed dairy farmers across Pennsylvania regarding key industry issues. Almost 250 dairy farmers indicated they had a family member to transition the farm, however only 64 had “some sort of transition plan,” Frey said.

Frey and Mike McGrann of the Center for Family Business gathered sets of farm families from Pennsylvania, Maryland and Ohio at the Conference Center at Central Penn College on Tuesday to start the transition planning process.

Families enter into the idea of farm transition with the goal to “protect the family business.” But if the farmer fails to take into account the other parts of a family business cycle — the individual and the family — it leaves the door open to conflict.

“It’s not just about the farm, but all of the stuff,” McGrann said. “We are all here to protect (the farm) but if all we focus on is (the farm) we fail to protect it.”

McGrann said success is dependent on the family.

“The extent to which you as a family to talk about all of those issues, at the end of the day, determines your success,” he said.

Dairy farms might not have some of the pressures of other family businesses that have to take into account how much it would cost to produce their products in China, but they still have challenges, McGrann said. The key is always looking forward and having a business vision and values.

He said honest conversation is important in looking at the “familiness” of a family business. There are things that families will do very well, while other things will constrain the business or farm.

He used example of his interactions with his family as well as the interactions of the families he consulted. Some points, such as the indications of when a father was nervous, brought humor. Others, such as parents who treated their children equally instead of fairly to avoid addressing problems demonstrated how hard it is to successfully manage a family business if potential conflicts are not addressed.

“Do we have rules, processes, structures in place to create accountability?” McGrann said. “What great businesses do is define goals and how do we have accountability to these goals. Accountability is tough.”

The other part of the conversation is relationship and how the different generations interact. McGrann called it “relationship capital” or the ability to talk through the difficult conversations and decisions in a respectful way.

“You can build relationship capital or destroy it,” he said.

If leadership is so important to farm transition, why is it so difficult?

“Because they pretend that the challenge of leadership are rational and tactical, rather than emotional and conversational,” McGrann said.

Yet, the success of family communication is what can make or break a plan.

“Any place there is a broken relationship in your business, it is costing you money,” he said.

Actively listening to others and asking questions is important. It shows that the other person’s thoughts matter. This builds the “holy grail” of communication, a relationship, McGrann said.

“Listening means that you are trying to understand, even if you don’t agree with them,” he said. “Listening allows the acknowledgement of the other person and their value.”

If a leader wants to be heard, “you have to make the commitment that you are willing to listen to them,” McGrann said. Trust is gained “if you are willing to trust them.”

He also talked about the need for personal responsibility.

“Mediocre leaders look out the window for someone to blame, McGrann said. “The great leader looks into the mirror and owns their part first.”

Does milk have a lot of untapped potential in today’s competitive beverage market?

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