How to step down but not out
“Timing is everything” applies to more than we might think – steak on the grill, stocks and bonds and letting go of the reins in a family business.
If we’re lucky, we recognize when reducing the daily stress of running a farm starts to sound good. For many, the preferred plan of action is a gradual relinquishing of responsibilities rather than full retirement. Whether you go cold turkey or ease out gradually, you’ll need a plan.
Mark Voeller, Linda Fairburn, and Wayne Thompson point out in their book Exit Right that “while many family business leaders can gauge their place in their life cycle accurately, they must also be aware of how stepping back, but not down will affect the rest of the family.”
In their view, often the business leader waits too long to begin to relinquish control when energy levels start declining and decisions become more difficult to make. Elaine Froese, certified life coach, and columnist, based in Boissevain, Man., says the need to control sometimes gets in the way.
“Rivalry with the next generation can slow down the easing-out process. You might be thinking, ‘What if I turn the farm over to my son and he does better than I did?’ If you get into that kind of downward-spiral thinking, letting go becomes a whole lot more difficult.”
It takes maturity and insight into yourself and your successors to know when the business needs a whole lot more energy from the next generation. “Transitioning out of the business usually takes two to three years,” says Froese. “Make a plan. Put markers in place. On this date, I will transfer my shares. On this date, my son or whoever will start delivering the grain to the elevator.”
Voeller, Fairburn, and Thompson said: “If waiting until old age or ill health becomes your operational reality, you may find that you don’t have the steam to effectively play your role or that the hand-over has come too late for both the business and the next generation.”
Experts say that at about age 60, most people start considering what retirement plans will look like. Not addressing this head-on creates anxiety in the business and in the family.
“Generally speaking, it is better to choose your successor(s) sooner rather than later because effective leadership transitions don’t happen overnight – typically, they take from five years or more,” says Froese.
It takes this long because adjustments are required that can trigger new ways of managing the farm business. Voeller, Fairburn, and Thompson say these need to be considered “because you want the development of your successor to coincide with the readiness of the business for new leadership and with your readiness to step down, but not necessarily out.”
It’s sometimes easier to give up ownership than management control. However, experts agree that not giving up some management control “can be an enormous impediment to a smooth leadership transition. If you don’t marry authority to increasing responsibility, you risk demoralizing your successor and confusing everyone else,” they say.
Stepping aside but not out requires clarity every step of the way. Create a timetable so those working with you know what to expect. Voeller, Fairburn, and Thompson say: “Make sure everyone is clear about your future role, responsibility and authority – including you. Step aside completely only when you are ready to stay aside.”
Froese adds important insight: “Fear of aging can keep people in leadership roles longer than is good for them or the business. Another reason is that they have nothing to look forward to. You can’t transition into something if you don’t have something to go to.”
Exit Right points out that newly retired people sometimes get bored with their new position in life and start “hanging around the business, often giving orders and otherwise helping out.” This creates resentment and confusion that, in worst-case scenarios, lead to the newly charged successors backing out of the business. The advice: “Write out your new role and stick to it. You’ll spare your family and the employees some difficult situations.”
You may want to keep your hand in combining or meeting with chemical reps. You may want to ride fence lines or do the shop work. Figure out what you’d like to do, name those responsibilities formally, communicate them and follow through.
Voeller, Fairburn and Thompson offer this analogy: “Being in business is like being in a canoe. Why? Because there are two times when you can really get into trouble: getting in and getting out.”
This article was originally published by Bayer CropScience in Farm Forum magazine. Posted with permission