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Family Business Matters 03/16 08:14


Family Business Matters 03/16 08:14

Changing the Chain of Command

An organizational structure and defined roles help in the transition to new
leadership.

By Lance Woodbury
DTN Farm Business Adviser

When family business members talk about management succession, the
discussion often focuses on the handoff of tasks and responsibilities, and
decisions from one generation to the next, as well as the capabilities and
readiness of a younger generation to assume a leadership position. But, when it
comes to actually implementing the transition, one of the obstacles that
confounds family members is the movement of authority from one person to
another. The transition to a new decision-maker is not easy.

The "chain of command" is a phrase we often associate with the military or
with an organizational chart, connoting a flow or order of authority and
decision-making. For the following reasons, it becomes difficult to adhere to a
new chain of command in the family business.

HISTORICAL PATTERNS

When the senior generation has been the primary decision-maker for decades,
it becomes easy to default to that person or group. The decision-making process
becomes a routine, almost a habit, and both the older members, younger members
and non-family staff have all become familiar with how decisions are made. In
fact, the decision-making patterns become so routine that people often don't
even realize they are driving the process.

EMBEDDED KNOWLEDGE

Another reason a new chain of command is difficult to accept is the older
generation's deep knowledge of the farm or ranch business. They are such a
resource, with their significant experience and clear opinions, that it seems
at least inefficient, if not an outright mistake, to not use their wisdom. But,
it's often hard to tap that knowledge without feeling or appearing to cede
control of the decision.

OWNERSHIP RIGHTS

Because of the capital intensity of agriculture and the building of equity
in land over many years, the senior generation is often in an ownership
position well past the prime of their management role. They may own the land,
still have ownership in equipment or be a shareholder or partner in an
operating entity. When their name is on some portion of the bottom line, it can
be difficult to judge the decisions in which they should, or shouldn't, have a
large say.

OVERLAPPING ROLES

Finally, in small and family-owned businesses, where the owners are also the
managers, it's often difficult to separate the person from the position. If Dad
(who has family authority) has also been the boss (with management authority)
and is a major shareholder (with ownership authority), then how does one easily
separate and delegate the authority of a specific management decision? The
sheer force of those roles being embodied in a person or in a generation can be
difficult, and sometimes feel impossible, to alter.

REMEDIES

There are several ways to work on changes to the chain of command. First,
simply trying to be more aware of the decisions that are made every day -- and
who should make them -- brings focus. Second, writing down how the
organizational chart looks now, then drawing how you want it to look in the
future and sharing it with others helps to clearly communicate the change.
Third, having the senior generation take a strategic vacation, or simply be
unavailable some days, helps force the shift. Finally, committing to the
transition in a group setting and asking others to help hold you accountable to
the transition gives others permission to nag you when you break the chain.

Letting go of duties performed for decades can be difficult, and for the
younger generation, making decisions with major financial effects can be scary.
But, a successful family business transition depends on the positive shift of
authority from one generation to the next.

**

Write Lance Woodbury at Family Business Matters, 2204 Lakeshore Dr., Suite
415, Birmingham, AL 35209, or email lance@agprogress.com.


(AG/SK)

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