Legacy Project: Smart Skills for Next-Gen Leaders

04:24PM Feb 22, 2019
Dick Wittman
Dick is a former manager of a crop, cattle and timber family operation in Idaho and provides consulting services to farmers and agribusinesses.
( Farm Journal )

Winter is the season farmers tune up their machinery and agronomic practices. It’s also a good time to put their management engines in the shop to tune up business and financial processes. As you look to farm succession, what are the key managerial skills your successors should master? What is the management development plan for your farm?

One of the most notable educational events of my year is teaching at TEPAP (The Executive Program for Ag Producers) each January in Austin, Texas. Farmers entering the program self-test their level of adoption of key farm management proficiencies. We have 20 years of data demonstrating producers consistently receive a flunking grade in many areas of farm management. That’s using the grading standard where anything below 60% is an F.  

Mastering these best management practices is not a guarantee of success. But management surveys and research show those who master these best practices are consistently in the top tier of profitable and sustainable businesses. Want to score yourself? Take the Wittman Proficiency Test at wittmanconsulting.com.  
Seasoned veterans in agriculture might have successfully functioned without mastering many of the best practices. But in an increasingly competitive business world, your successors will be competing with professionally run businesses that are implementing best practices. These businesses are proactive, resilient and have a culture where good communication and execution are the norm.

While many TEPAP Proficiency Test average scores have not moved materially in years, some areas have shown progress. For instance, more farmers are documenting standard operating procedures and farm policies. More farms are realizing the importance of writing job descriptions and conducting evaluations.

Alarming, however, are test scores showing lower proficiency in financial areas than 20 years ago. With businesses managing larger capital and employees, it’s dangerous to not know annual true accrual profit. It’s no wonder farmers are stressed when barely half base marketing decisions on cost of production.  

Take the test and map out an improvement path. Make it a priority to spend as much time tuning up your management practices as you do your agronomy and equipment practices.

Average TEPAP Scores on Best Practices

  • 37% have written mission, vision and value statements.
  • 47% have an operating plan and cash flow budget that is monitored regularly.
  • 29% have a plan in place that addresses strategic issues in the business.
  • 35% have written and detailed job descriptions.
  • 33% have documented personnel and operating policies.
  • 24% document Standard Operating Procedures.
  • 24% conduct employee performance appraisals regularly.
  • 53% update and share financial records regularly.
  • 66% prepare income analysis on both cash (tax) and accrual.
  • 52% prepare balance sheets that reflect cost, market value and deferred tax.
  • 27% calculate and monitor key financial performance ratios annually.
  • 33% use capital investment feasibility tools to optimize equipment purchases.
  • 58% establish market price targets based on breakeven points and clearly defined cost of production.