A family ranch is more than just a legacy passed down from generation to generation; it must also be a viable business if it has any hope of lasting. The leadership role often goes to the patriarch, and the next generation generally has to wait several decades in lower management before having the opportunity to start making business decisions.
If this sounds familiar, you may be in the position of thinking about retirement and worrying about how to transition the leadership decisions to a son or daughter. Or perhaps you are on the other end of it, wondering how soon mom or dad will let you take over the reins and hoping that your parents have a transition plan in place.
Yet, the next “in line” may not be the most appropriate CEO. Determining the transition of leadership in the family business needs to balance the best interests of the family, business and the ownership of the ranch, says Steve Moyer, for SKM Associates Family Business Advisors.
To determine the most qualified individual to lead the ranch into the next generation, Moyer offers these tips:
1. Develop a family employment policy
Moyer says, “Encourage family members who desire a leadership role to gain work experience outside of the family business and specifically define the objective criteria necessary for employment and leadership.”
2. Define the role
“Clearly define, in writing, the job description for the CEO,” says Moyer. “Identify the expectations and metrics to which he/she will be held accountable. This should also include the knowledge, skills, and abilities expected in the role, as well as a commitment to the family’s values and objectives. Have the senior generation guide the process of selecting their successors before they leave.”
3. Consider employing someone outside the family tree
“Be open to a non-family CEO for a season if a family member is not ready to assume leadership,” he says.
4. Set the CEO up for success
“Develop a communication structure and a governance system that efficiently and effectively outlines the processes for the family, the ownership, and the business to keep focused on the correct goals and objectives,” says Moyer.
To read more of Moyer’s tips, click here.
For longevity of the ranch, profitability should be a top priority. With strong mentorship, a clearly defined path and a set of achievable goals shared by all involved parties, a ranch is better equipped to transition leadership and succeed through multiple generations.
The opinions of Amanda Radke are not necessarily those of beefmagazine.com or Penton Agriculture.