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Respecting the three circles of management transition: family, business, and ownership

November 04, 2022

Respecting the three circles of management transition: family, business, and ownership

Synopsis
3 Minute Read

Management transition is a topic that encroaches all three circles – family, business, and ownership, and it must be respected to ensure we do no harm throughout the system.

In most cases building your farm business has taken decades, if not generations. It takes time and care to build a farm and it requires an effective process to properly plan for its transition.

Besides having family members eager to take the reins of the business as a prerequisite, understanding the full breadth of what it takes to manage the business and transition is essential. One topic that requires deliberate attention through the process is management transition.

Taking inventory of the businesses non-financial assets – inside and outside your company is prudent and takes considerable attention. Farm transition plans need to consider the hard and soft skills required to successfully navigate the business of agriculture.

More and more systems in business are interdependent and interconnected with other systems and this requires a captain and team to plan through and successfully navigate as part of your transition. One thing that is certain is a management transition - every participant will experience the changes differently. Some will perceive it as moving too fast, while others will perceive it as moving too slow. Both are right in their own minds.

Management transition is a topic that requires hard and soft skills in the business circle but can affect all three circles. It must be respected to ensure we do no harm throughout the system.

The Three Circle model provides the system of family, business, and ownership

3 overlapping circles. One circle is family, another circle is ownership, and another circle is business.

While transitioning is an exciting time for some, it can be terrifying for others. But all can agree it’s a change. Even if you have worked on the family farm for years the transition to management represents change. Some will identify this as giving up things they have done in isolation for years. Others will be thrilled they ‘finally’ get to make it theirs. This distinction between actors deserves recognition and thus needs conscious management through a transition.

Staying centered through the process and being focused on what the family, business, and owners want to achieve is so critical. The management transition should emphasize “we” not “me”. It is through considerable conversation and analysis of your business that will uncover your needs through management transition. The destination can provide great clarity to the conversations.

A principle we adhere to through transition planning is “do no harm”. It is both the art and science of transition work. As we look to support a family farm through transition, this principle is central to each conversation and step in the process. In family transitions detaching emotion from business decisions can be difficult. As such, having that independent third-party to help guide the process has proven valuable.

If there are multiple participants vying for that top management position it can be even more difficult for families to navigate these choppy conversations and decisions. This is part of the process of a management transition. By leading with ‘do no harm’ we encourage families to apply the same principle especially around identifying and introducing new management.

Every transition plan is unique, in that there is no two identical family or farm business. Establishing your vision as a family and for the business is a necessary step early in your transition. When doing your management transition, a good starting point is addressing and finding common ground on, “where is business going?”. When you address this question, you can then assess yourself and your team. Clearly articulating your vision will help the management transition teams ability to take inventory of your individual and collective skills, abilities, and aptitudes, which helps to support the business today and into the future. This vision clarity will bring confidence and strength to the family and the management team.

Management transition requires you to take inventory of your human and non-financial assets. A sound assessment of your business needs against your teams soft and hard skills should expose areas of good coverage, overlap, and conversely where gaps or learning opportunities may exist.

Keeping in mind that we should not confuse management with leadership. While in most farm operations these terms are synonymous with the same person – they don’t need to be. Leaders can often have a different skill set than managers. When we do a personal assessment combined with some 360 feedback, we can see our blind spots and how we can use them for personal development.

While many farm families may find this step uncomfortable or unnecessary for their “little farm business” its value to the individual, and in turn, the business can be transformative and healthy. A healthy system starts with relationships that can communicate without doing harm.

Communication is at the heart of successful management transition. Being able to communicate effectively is a skill and art. Being able to receive communication without offense is also critical. I often tell families that when you think you have communicated enough, communicate again. It is hard through transition to have too much communication. Communication is the bridge from where you are to where you are going. When people hear it and hear it often about where it is the business is going it removes the ambiguity to provide clarity.

Communication allows the family to seek understanding and buy-in to create alignment. You will likely want to offer frequent family, business, and ownership meetings – separate and distinct from each other, through the process to allow participation for actors in each circle.

Contact us

To learn more, contact Trevor MacLean, MBA.

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