Get the Wheels in Motion to Start a Succession Plan Today

What is the future plan for your operation? Often, dairies have an idea what their operations will look like down the road, what kind of barn their cows will be housed in and what milking parlor investments they plan to pursue. But they can’t answer who will be the successor of the operation, as no formal succession plan has been set. 

Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions. This process isn’t quick and can take 5 to 10 years when done correctly says Samantha Gehrett with Penn State Dairy Extension.

“In some cases, there could be roadblocks and obstacles that can push the timeline even further out,” she says. “One way to look at the farm's transition plan is as a roadmap of what would happen if the owners/operators of a farm were to suddenly become unable to complete the tasks the farm needs to operate.”

The first step is simply acknowledging the need for a succession plan.

“Often, the most challenging part of this process is the communication between parties,” Gehrett shares. “A greater understanding of the role of communication in farm succession planning can help farm families develop workable succession plans that result in productive family businesses while maintaining good family relationships.”

For succession planning to succeed, family members must have a shared understanding. Open communication is vital.

There are some basic concepts for effective communication with families. They include:

• Regular Meetings — Set aside a specific day/time to discuss issues related to transitioning the farm. Document decisions and unresolved issues.
• Ongoing Conversations — Start as early as possible and keep talking/planning until all issues have been resolved and a written plan has been completed. It may take several meetings to accomplish this. The point is to stay with it until you have a plan.
• Participation — All family members can communicate their wishes, expectations, and opinions. Listen thoroughly to what others are saying.
• Being Clear — Do not assume others know what you mean or want. Everyone needs to state their feelings, expectations, and opinions clearly and make sure everyone else understands them.
• Having Solid Plans — Decisions should be written so everyone can read them and decide whether they agree. Wills, estate plans, financial documents, organizational charts, and job descriptions are all good tools for deciding concrete plans and should be available to everyone involved.

“Succession planning should be viewed as a lifelong, continuous process,” Gehrett says. “Family members' situations change over time, as do family communication dynamics and issues which affect the financial sustainability of family-owned and operated farms.”

A Fair Plan

Determining what is fair and a plan that everyone agrees with is often a hangup when it comes to getting a succession plan off the ground.

“There is no one answer to the question of a fair outcome. Being fair may mean that some people obtain more than others. Being fair can mean that some people will be treated differently than others. Fairness can be considered a target to strive for while being realistic enough to know that many factors can affect whether it will be reached. In family succession planning, fairness enters when deciding about the business, choosing a successor, fulfilling impacts to the business made by some people, and supplementing people who need it. Did you want to put in a line starting that "Fair isn't always equal," she emphasizes.

According to Gehrett, don’t get hung up on having every single detail of the succession plan figured out today. Start with communication and talk things through. Forward motion is better than no motion at all. Sometimes what is needed is a third party who can bring a non-biased view to help coach family operations through the steps and discussions of succession planning.