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Holding the middle

00:00AM Sep 19, 2008

One dairy's approach to retaining middle managers

By Rick Mooney

Photo by Rick Mooney
Gary Ruegsegger (right) with herdsman Jon Wookey says
deferred compensation plans
should be designed with the
individual in mind.

Developing a team of middle managers for an expanding dairy business requires a signifi cant investment of time, effort and money.

But putting that team in place is only one part of the job, says Gary Ruegsegger, co-owner of 1,000-cow Maple Ridge Dairy Business LLC near Stratford, Wis. "It's a continuing process,” he says.

"We work hard at developing and training our middle managers. But even as we're doing it, we realize we may eventually lose that person to another dairy. Part of our
job is to take the steps necessary to make sure the people we've invested in stay with us for a long time.”

Toward that end, Ruegsegger and his partners, Ken and Phil Hein, employ a variety of strategies to keep their middle management team—currently made up of a herdsman, assistant herdsman and a crops/shop supervisor—in place. Four years ago, they set up a non-qualified, deferred compensation program for middle managers.

Basics of the program are relatively straightforward. As a starting point, the dairy's senior management team meets individually with each midlevel manager to establish a yearly amount to be invested in the employee's deferred comp account. That amount is in addition to what the employee receives in their regular salary and benefi ts package.

Employees are allowed to choose among a variety of investment vehicles for the account. "If a person is a little more risk averse, they might opt to have the money invested in a certificate of deposit or a money market fund,” Ruegsegger says. "Another employee might choose to invest in a more aggressive stock mutual fund.”

The program is designed so that the middle manager becomes fully vested after a set time period. The length of the vesting period varies according to job position.

"An assistant herdsman probably isn't going to want to stay in the same position for ten years,” Ruegsegger says. "Instead, they'll get some experience, and then look to move up the ladder with another dairy. "In that case, you might want to set things up so that person will be fully vested in three to fi ve years,” Ruegsegger says. "On the other hand,a herdsman might be likely to stay with you longer. The vested period for them might be fi ve to ten years.”

Ruegsegger advocates taking this kind of fl exible approach in structuring all salary and benefi ts programs. "When it comes to money, time off, professional advancement opportunities, and so on, every individual has different wants and needs,” Ruegsegger says.

"We try to recognize those individual needs and wants and take them into consideration in setting up our programs.A cookie-cutter approach, where you try to make everything the same for all employees, usually doesn't work very well.”

Ruegsegger encourages producers considering a deferred compensation program to work closely with a lawyer or tax specialist. "It's not really all that complicated,” he says. "But there can be some legal and tax ramifi cations.You want to do it right.”

The benef ts of this kind of program work in both directions, Ruegsegger says. "It's good for employees because it provides an additional fi nancial reward,” he says. "And it's good for the dairy because it gives our valued middle managers another reason to stay with us.”

Holding once-a-month meetings with middle managers to discuss progress in meeting individual and overall dairy goals is also part of the Maple Ridge strategy for
retaining key personnel.

"These meetings are in addition to all the regular meetings we have to talk about herd management and other things that are going on at the dairy day to day,” Ruegsegger says. "They're geared to reinforcing the idea we're committed to helping our middle managers develop and grow as people and as managers.

"We talk about things like their strengths and weaknesses as managers, the importance of communication with other employees and upcoming professional improvement
seminars or programs they might want to attend. The meetings give us [senior management] a better picture of how we're doing in our role as mentors.”

Encouraging middle managers to get involved in the local community is another component of the strategy. "We've hired several employees from other states over the
years,” Ruegsegger explains.

"We've found that if we can help them get more involved in the community [helping them fi nd a church, hook up with a service club or join a sports team], they're more comfortable at the dairy. In turn, that makes it more likely they'll stay with us longer. We're focused on our business, but we recognize there's more to life
than a job.”

Rick Mooney is a contributing editor to Dairy Today.

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