Leave a Legacy
Kevin Spafford is Farm Journal’s succession planning expert for the Farm Journal Legacy Project. He hosts the nationally-televised ‘Leave a Legacy’ TV, facilitates an ongoing series of workshops for farm families across the U.S., and is the author of Legacy by Design: Succession Planning for Agribusiness Owners.
Separating Business and Family
Jul 28, 2011
From Legacy Moment eNewsletter (07/22/2011)
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There are a few common business tools farm owners should use to separate operational decisions from family issues. Since family leadership and business management are two completely separate avocations, these tools allow owners to use pre-established rules and guidelines to manage the operation. A properly structured business will include an operating agreement that governs management decisions at the ownership level.
An operating agreement is a binding document owners agree to follow when making important decisions. When used in an LLC, the agreement is similar to the bylaws that govern a corporation or partnership.
While there are many benefits of an operating agreement, most are related to objectivity and control. An operating agreement:
1. spells out an owner’s rights, duties and obligations;
2. details decision-making authority, conditions and process;
3. ensures that the entity is distinct and separate from the owners of the operation;
4. keeps the government from settling disputes, dissolution issues, etc., which are governed by respective state statutes or default rules, if no agreement exists; and
5. removes subjectivity, ensures objective reasoning and informs owners, employees and applicable family.
A family-owned operation should also have a family employment policy, which pre-negotiates understanding of how, when and under what circumstances a family member may be eligible for employment.
Though it sounds a bit formal, a job description spells out the duties and responsibilities of each position in the operation. It also includes the method management will use to review employee performance.
Job descriptions and a family employment policy are components of an employee manual. This serves as a go-to source of information for all employees, management and employee candidates.
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