Coming home to the family farm

Let’s imagine you have just come back to the family farm. You have completed your diploma or degree, your head is full of ideas, your energy is overflowing, and you are absolutely itching to sit down and have a conversation with Mom and Dad about when and how you are going to take over the farm.

Then let’s also picture what happens next. Every time you steer the conversation anywhere near your taking over, Mom instantly shuts it down. She changes the subject and you are beyond frustrated. And Dad isn’t any better, always lamenting how he hasn’t got time just now for that kind of serious talk; maybe next season.

You’re supremely confident in your own management abilities and in your future vision for the farm, and you’re getting really rankled that they are so reluctant to talk. And that’s just TALK, darn it, never mind getting an actual plan down on paper.

It’s not like you’re asking for anything they haven’t promised you a million times over, or that you’re asking for anything that their parents didn’t give to them!

What’s the problem?

Probably, there are three of them, says Iowa-based farm mediator Andy Caygeon Junkin.

The first is lack of confidence.

“The parents love their kids, but that’s different than feeling they can take over full management of the farm,” Junkin says. “At this stage, Dad feels he can’t walk away from the business without it collapsing.”

Second, your parents think they’re smarter than you, and definitely wiser. “They look at the farm as theirs, not ‘ours’,” Junkin says.

And finally, both Mom and Dad think the stakes are way too big.

Junkin, the founder of Stubborn Farm, has spent the last two decades trying to help farm families negotiate these initial stumbling blocks, and (in his words) “turn stubborn from a bad word to a good thing for your family business.”

So how does the farm’s successor- in-waiting get things on track? How do you get the conversation going, and how do you give it real traction and so it will actually produce a concrete plan?

Junkin’s advice isn’t what a lot of would-be farmers might want to hear.

“The key thing is not to approach (succession) from a sense of entitlement and pride, but from a sense of humility,” Junkin says. “Ask yourself, how can I become a partner and friend that anyone would want to work with? How can I earn the opportunity to be a partner in this business?”

Focusing on success

Part of the answer may lay in the word itself. Just saying “succession” is enough to scare off many a farm matriarch or patriarch, which is why Junkin suggests striking the last three letters from the word and concentrating on the “success” part first.

“We need to focus on success, because we all too often get focused on fears,” Junkin says. “And we need to get really good at change.”

Different advisors develop their own approaches for achieving that. Junkin calls his the 9,000-hour rule because he wants it to act as a framework that will help farm families achieve their own self- improvement goals first, and, in doing so, change their relationship dynamics to focus on working together for the future success of the family and the farm.

The plan

“I believe the succession talk should happen after the successor has put in 9,000 hours (three years) after college and each month has gotten a satisfactory job performance review,” Junkin says.

“Then you should get a clear, transparent plan on how the successor can earn (not be gifted) equity over the next 30 years.”

Junkin says the next generation shouldn’t get any equity upfront. Instead they should earn one percent in stock options as they put in x-hours. (These can be non-voting shares that become voting shares at some point.)

As successors continue putting more effort into growing the farm, they should earn a growing proportion of equity. But along the way they need transparency, so they don’t feel they are walking on quicksand.

The goal is a process that addresses the fears of the outgoing generation while also allowing for the enthusiasm of the incoming one to be given some free reign, hopefully creating a road map that helps avoid frustration, plays to everyone’s strengths, benefits farm efficiency, and keeps family relationships intact.

Even so, there are priorities, and it’s important to address the parents’ fears first, which means this may be the right time for the next generation to get a quiet word of advice. “Think about what your parents are thinking, not what you are thinking,” Junkin advises successors.

“Address their fears first, so that when you have the talk, their fears are eliminated.”

Seriously, 9,000 hours?

Farming takes commitment, and there’s only way to prove you’ve got it, Junkin tells young farmers. You have to show it. You can’t just say you’ve got it.

So, find a way to prove it. In Junkin’s 9,000-hour system, the successor has to put 3,000 hours a year into the farm business with a self-performance review every month for the first two years.

Yes, that is a tall order, he says, but it needs to be to demonstrate you’ve got what it takes. It works out to 60 hours a week, although it will rarely be exactly like that, especially considering that most farms are at least somewhat seasonal.

Then, after those 24 consecutive reviews in the first two years, the family can begin a conversation to outline a succession plan, with another year to tweak it before finally putting the plan in place after year three.

The overall process has three main goals, Junkin says.

First is to help the successors realize their full potential by taking their skill set and their character from “good” to “great,” so they become both competent managers and equally successful in their personal lives.

Second is to eliminate the arrogance and “I’m smarter than you” attitudes that plague both generations, and to learn to value each other’s roles, and make better, smarter decisions together as a family.

Then, third, is to get away from approaching the family and the farm from any standpoint of entitlement, pride or narcissism, replacing it with a sense of humility, which means learning that it’s not about “me” but about the shared legacy that the family is building for future generations on the farm.

“Before we have the big talk, I want to make sure that all the relationship issues are evolved so that it doesn’t matter who has more equity on a piece of paper in a safe at the bank. What matters is how do we share this legacy that took several generations to build up?” Junkin says.

To get there, the monthly reviews must tackle hard issues. “They must answer questions like, are you a joy to work with, do you bring good ideas to the table, do you do what you say, can you handle crucial conversations,” Junkin says. “Nobody’s going to get a perfect score, but if we evolve these factors over two years, so everybody goes from a D to B+, the way everybody gets along is dramatically different.”

The essential buy-in

It’s usually crucial for the successor to initiate the process, but eventually, everyone has to commit to the same self- evaluations for it to work effectively.

“Approach this like a New Year’s resolution to better yourself,” Junkin says. “Ask your family to give you feedback on how you can evolve your performance and go from good to great. Ask them, monthly, to go through and evaluate your work performance and how you conform to the family’s cultural values. Ask how you can change your behaviour. Then, with humility, make one change a month. Don’t just talk about it, but actually go out and consistently make those changes.”

After six months of making changes to their character and behaviour, the successor should ask the family to join the process.

Each month get the family to make one improvement to how you together work as a team, Junkin recommends. If the next generation has demonstrated self-discipline to this point and the parents can see the improvements they’ve made, they’ll be primed to come on board.

It’s important to target small, easy changes at first because the aim is to begin the process of helping people become self-aware and open to changing themselves. As time goes on, the family can deal with bigger and harder topics because they’ll be ready to deal with those tough conversations.

“If somebody is following through on what they said they’re going to do instead of doing whatever feels good that day, if you can tweak that habit, for example, this will have huge impact as to whether that farm is going to be around in 30 years time,” Junkin says. “If you can make 24 little improvements like that over 24 months, just one improvement a month, it’s a game- changer to each person’s character and how they work together.”

Then, anyone else who wants to be involved as a partner in the farm needs to complete the process, even if they aren’t sure whether they want to stay on the farm.

“They have a two-year window to start doing more. If not, the framework is set for them to understand why they are getting less ownership,” Junkin says.

When is right?

While Junkin designed his 9,000-hour rule for young people coming home from college to farm, the same approach can work at any stage of succession.

“It works the same for a family where the successor has already been there for 20 years; it’s simply having a rule of thumb for, say, every 1,000 hours they put into the operation, they earn x per cent options in buying into the business in the long term,” Junkin says. “What’s important is the mindset of the farmer goes from this being mine to ours.”

Ultimately, the commitment to self-improvement and collaborative partnerships leads to an environment where the transfer of wisdom can take place, which Junkin argues should take priority over transferring assets or shares.

“Everybody is on the same page and trusting one another,” Junkin says. “If everybody can trust that their partners are going to look at it for what’s good for the family, not just looking out for number one before walking into that succession planning discussion, it’s a whole different conversation.”