The week of June 10, Farm Journal is celebrating the next generation of American agriculture. Our goal is to encourage you to plan for the future and cultivate multigenerational success through the transfer of skills and knowledge. Think tomorrow, act today to align your asset, resource and financial legacy.
Today’s farm CEO transition is different than the last generation.
Dick Wittman, who has been consulting in family business management, finance, and process improvement areas for decades, says one of the top challenges facing on-farm leaders today is how to get out of the way, without totally going away.
“Forty years ago, the business was the farm operator’s primary asset. When business owners reached retirement age, they sold the business to a successor and that often became their retirement security. Successors often took on the business investment risk and took over the management decisions and debt service at the same time,” he says.
Today, the size and scale of farm operations have changed the dynamic.
“Our farms are multimillion-dollar businesses that are larger and more complex because of the significant capital required to have a viable business. It’s rarely practical to sell a 100% interest in the farm business on credit or even give the business away as an integral part of the retirement process.” Instead, , transition of ownership and transition of management are occurring over different time cycles.
“Owners have an opportunity , as they approach retirement age to move from CEO to board chair and mentor,” Wittman says. “I see many farm CEOs with a lot left to offer the business. They have a healthy love of the business and want to find substance in what they can do. The board chair/mentor role gives them a new way to think about how to extend their career with the farm.”
Recommended Reading: To explore this idea of how to expand your career on the on-farm, Dick Wittman recommends “The Second Mountain” by David Brooks.
The role of farm board chairman could include:
- Policy review and refinement
- Investment analysis
- Strategic planning
- Hiring, coaching, mentoring successors
- Performance review and feedback
- Assisting and advising successors in day-to-day operations (but not telling them what to do)
Wittman has walked this journey on his family’s diversified Idaho farm since 2017. At that time, he daughter Cori Wittman Stitt took on the role of CEO, and Wittman became the board chair and transition mentor.
Here are lessons the incoming and outgoing leaders have learned in the process:
- Be patient. You can’t develop successful future leaders unless you give them latitude to make their own plans on their own timetable.
- Avoid micromanaging. Going from being the leader for years to now being a helper is challenging, but it’s required to step back and truly just be a helper.
- Clear and Enforced Policies are still important . But the new leaders need freedom to revise policies that fit their value systems and work/life balance goals – so policies in the next generation may not look the same as the previous generation followed.
- Transition can be done in degrees. The chairman can retain responsibility for some operational duties that successors are not ready to put on their plate. But the outgoing leader needs to divest the core management responsibilities. Technical areas can be an exception.
“It’s rewarding to be able to be in business with your family,” Wittman says. “We are a family in business together. And if we are committed to running this business professionally, we can make transitions for the CEO to board chair work and still enjoy family relations.”
Wittman shares his overriding rule: for transitions to be successful, there must be alignment of expectations – that can extend to values, decision roles, clear structure and policies, and commitment to open record sharing and professional communication.
“If handled improperly, transition events can be the death of your business. Or it can strengthen your business and clearly outline who you are and where you want to go,” he says. “I believe that good process will ultimately reflect in good long-term results.”
