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"We demand rigidly defined areas of doubt and uncertainty!" -- Douglas Adams, "The Hitchhikers Guide to the Galaxy"
I recently heard a workshop presenter refer to certain negative behaviors or practices in the family business as "the dark side." One view of this "dark side" in family agricultural companies is a world in which participants are left "in the dark" about the business: What's it worth? Are we progressing? Where are we headed? Who will own it? Where do I fit?
Leaving these questions unanswered leads to a darkness, an overall climate of author Douglas Adams' "doubt and uncertainty" about the future. Consider these three behaviors and how they apply to your company:
KEEPING THEM IN THE DARK FINANCIALLY
I've seen a number of parents or grandparents keep a tight lid on any financial or sensitive information about the business. While I can appreciate their interest in keeping financial issues private, and I understand the concern that "if they know what we're worth, they'll quit working hard," the parents keep the numbers so confidential that not even family members working deep in the business have a good understanding of the size and scale of the organization. And they don't give enough credit to the values they've instilled in the next generation.
The extreme example of this is a spouse who keeps all business and financial information out of view of their partner, and when the spouse dies, their partner is left to start from scratch in understanding their now-significant financial position and requirements. There are also plenty of examples of where the senior generation has not shared balance sheet information with their adult children in the business, and so the next generation is left guessing about the overall financial position. How is keeping financial information a secret from future owners helping anyone?
Instead of keeping key information private, a better strategy is to develop expectations, or even a policy, around confidentiality in the business. Encouraging responsible behavior around how to handle sensitive information, and having a discussion of consequences for violating the policy, helps the younger generation appreciate the information and mature in their business practices. Sharing information also creates some level of competence in others, so that when something happens to the leader, there are others who understand the numbers.
KEEPING THEM IN THE DARK ABOUT FUTURE PLANS
In another recent Farm Credit workshop, Marcia Taylor, Executive Editor of DTN, noticed how many family members recounted stories of not knowing what "the plan" was for the disposition of assets. My own speaking and consulting experience confirms this. Sometimes, family members are in their 40s and 50s, have invested 20 or 30 years of work in the business, and have no idea what the senior generation intends to do with the farm or ranch. And quite often, the senior generation has no idea either!
There are some natural reasons that such a plan is lacking, or that discussions are not forthcoming. Planning for your assets beyond your lifetime requires a recognition of your mortality -- not necessarily a fun topic to consider. It involves a long-term plan in a business that has had its share of ups and downs. And it requires some faith that the next generation will figure things out. In short, trying to plan a generation or two out is not only an uncomfortable exercise, it can feel like a major guessing game.